of rational addiction are crucial for the design of public policy. In particular, accounting for peer externalities … addiction. In contrast to prior research, we allow individuals to make their consumption decisions simultaneous with savings and … labor supply. When addictive goods have a stronger habit formation effect (an addiction effect'), individuals choose to save …

costs of subsidizing corporate debt from the existing literature. Our theory also sheds light on why the IRS considers …

outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure …

payoffs, or because of informational externalities. In the first case, inefficiency manifests itself in excessive non …

We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities … externalities can help explain the dynamic process of offshoring, where the most productive firms offshore first and the others …

externalities. First, an undercapitalized country borrows too much since each firm does not internalize that an increase in …

incorporates both addiction and social interactions and show that, under certain conditions, social interactions reinforce the … effects of addiction. I also show how the dynamics introduced by addiction can solve the pernicious problem of identifying the …