We study the dynamics of an oligopoly market with network externalities. In contrast to earlier work, we consider a model where products are vertically differentiated and the number of firms is arbitrary. We show that the degree of network externalities has a one-to-one relationship with the...

This paper develops a model that is capable of replicating these empirical findings. It extends Hopenhayn (1993) industry dynamics framework by introducing firm ownership status (private or public) and allowing private firms to go public at a cost. The key assumption is that privately held firms...

This paper studies the formation of teams in the economy in which entrepreneurs dier by how much they can contribute to the joint firm. First, it documents, using the Panel Study of Entrepreneurial Dynamics, that the individual contributions are positively correlated across owners, even after...

This paper argues that the impact of credit constraints on the entrepreneurial activity and, via it, on economic development, crucially depends on the serial correlation in arrival of entrepreneurial ideas. Using an occupational choice model, it demonstrates that calibrating the serial...

This paper embeds a repeated partnership game with imperfect monitoring into a matching environment. We show that even though the underlying technology of production exhibits no complementarities with respect to types of the partners, the presence of imperfect monitoring leads to non-trivial...

the consumers who start saving in order to increase consumption of the commitment good in the future become risk lovers. We also argue that such behavior is likely to arise due to the presence of borrowing constraints; therefore suggesting that in the economies with consumption commitments...

Empirical studies document differences in firms' response to the introduction of various labor market policies. In particular, large and mature firms tend to participate more actively in targeted employment subsidy programs (under which firms receive subsidies for hiring disadvantaged workers)....

Entrepreneurs bear substantial risk, but empirical evidence shows no sign of a positive premium. This paper develops a theory of endogenous entrepreneurial risk taking that explains why self-financed entrepreneurs may find it optimal to invest in risky projects offering no risk premium....

Team production takes advantage of technological complementarities but comes with the cost of free-ridership. When workers differ in skills, the choice of sorting pattern may be associated with a nontrivial trade-off between exploiting the technological complementarities and minimizing the cost...

This paper characterizes the solution to a consumption/savings decision problem in which one of the consumption goods involves transaction costs. It then analyzes how such adjustment costs affect consumers' risk attitudes. Previous studies have suggested that transaction costs, by resulting in...