The authors present a Cournot-Nash model of horizontal mergers between firms that engage in spatial price discrimination. The model extends the analysis of such mergers as presented in the U.S. Department of Justice's Merger Guidelines. Rather than conclude the evaluation of such a merger with...

In models of asymmetric information, possession of private information leads to rents for the possessors. This induces mechanism designers to distort away from efficiency. The authors show that this is an artifact of the presumption that information is independently distributed. Rent extraction...

A dynamic model with many sellers and buyers is constructed. Agents failing to trade may trade in the next period. An equilibrium is found where sellers hold identical auctions and buyers randomize over the sellers they visit. The distribution of buyer valuations is endogenous. An auction with...

The authors characterize coordinated bidding strategies in two cases: a weak cartel, in which the bidders cannot make side-payments; and a strong cartel, in which the cartel members can exclude new entrants and can make transfer payments. The weak cartel can do no better than have its members...

This paper constructs a stationary rational-expectations equilibrium in which an extraneous random variable, called animal spirits, causes fluctuations in unemployment. The model assumes costly matching in the labor market and a thin-market externality in the output market that makes the...

An input supplier selling to competing downstream firms would benefit from publicly committing at the outset to all contracts. Efficient commitment, however, would require complete contracts. The authors study instead bilateral contracting, without commitment regarding others' terms. Each firm...

It is shown that, in a class of models with multiple externalities (one positive and one negative), all stationary equilibria may be locally stable to perturbations, in the sense that there exist perfect foresight trajectories leading back to the equil ibrium. Thus, scale diseconomies (arising,...