If buyers can choose to initiate bargaining with a seller, how does this alter the price that the seller `posts' in the market? And does the option of bargaining raise or lower expected welfare? This paper develops a simple model to answer these questions. With a single seller, the potential for...

This paper analyzes the optimal use of short and long-term share prices in management incentive contracts. We assume that the short-term share price is determined even before the manager has made her effort choice and, therefore, cannot be informative in the standard principal-agent sense. We...

This paper develops a model to analyse the Australian health insurance system when individuals differ in their health risk and this risk is private information. The Australian system involves mixed public and private health insurance with private insurance both duplicating and supplementing...

Credit card reform has been canvassed in Europe, the US and in Australia. The Reserve Bank of Australia (RBA) is in the process of implementing wide-ranging reforms to credit cards aimed at increasing entry, allowing merchants to surcharge for card payments and regulating the interchange fee -...

This paper provides a simple model of 'four party' payment systems designed to consider recent moves to regulate interchange fees and other rules of credit card associations. In contrast to recent formal analyses emphasising the role of network effects in the decisions of customer and merchants...

There has been considerable public debate over the effect of interchange fees on credit card transactions. Regulators in Australia and Europe have argued that these fees can be set by banks to have an anticompetitive effect. In the US, it has been argued that these fees, together with a rule...

<title>Abstract</title> <italic>A downstream firm with countervailing power can extract a reduced price from an input supplier. A waterbed effect occurs if this price reduction leads the input supplier to raise the price that it charges another downstream firm. Policy makers have been concerned that this waterbed...</italic>

This paper develops a model to analyse the Australian health insurance system when individuals differ in their health risk and this risk is private information. The Australian system involves mixed public and private health insurance with private insurance both duplicating and supplementing...