We identify the inefficiencies that arise when negotiation between two parties takes place in the presence of transaction costs. First, for some values of these costs it is efficient to reach an agreement but the unique equilibrium outcome is one in which agreement is never reached. Secondly,...

Despite a documented decline in the number of dividend payers in the UK it is found that aggregate real dividends paid by industrials actually increased between 1979 and 2000. This was attributed to the firms lost from the sample being generally small distributors of dividends whilst the growth...

This paper investigates the dividend decisions of firms in the UK reporting losses after sustained periods of profitability. It is found that loss-making firms are more likely to reduce dividends compared to firms that remain profitable, although a loss is far from a guarantee that the dividend...

We describe and analyze a contractual environment that allows a role for an active court. The model we analyze is the same as in Anderlini, Felli, and Postlewaite (2006). An active court can improve on the outcome that the parties would achieve without it. The institutional role of the court is...

We develop a model of unforeseen contingencies. These are contingencies that are understood by economic agents – their consequences and probabilities are known – but are such that every description of such events necessarily leaves out relevant features that have a non-negligible impact on...

We find an economic rationale for the common sense answer to the question in our title — courts should not always enforce what the contracting parties write. We describe and analyze a contractual environment that allows a role for an active court. An active court can improve on the outcome...

In 1990, Britain became the first developed country to reorganise its electricity industry to run on competitive lines. The British reforms are widely regarded as the benchmark for other reforms and the model used provides the basis for reforms of electricity and other network industries around...

Creative destruction is an economic theory of innovation popularised by the Austrian economist Joseph Schumpeter (2006). In this paper, Schumpeter’s theories are used to explain how radical technological innovations in information-intensive industries are influencing the erosion of traditional...

Creative destruction is an economic theory of innovation popularised by the Austrian economist Joseph Schumpeter (2006). In this paper, Schumpeter’s theories are used to explain how radical technological innovations in information-intensive industries are influencing the erosion of traditional...

Marketing in today’s highly competitive environment needs to consider forces that go beyond most firms’ available resources and capabilities. Work by Adomavicius et al. (among others) regarding the differentiation between product – infrastructure – ecosystem has gained increasing...