In this paper we analyze dynamic incentives of a firm to invest in production facilities in a less developed country with lower wage costs and lower productivity. Foreign investment induces that, due to technological spillovers, productivity of local firms in the foreign country increases. Firms...

We deal with new product preannouncements in markets where customer preferences are unknown and highly unstable, as would be the case with disruptive product innovations. Our analysis is focused on the tradeoff between the firms incentive to influence consumer preferences via preannouncements...

In this paper we examine how far the availability of venture capital influences the speed of technological progress in an industrial agglomeration. We consider a model where R\&D efforts of an incumbent firm generates technological know-how embodied in key R\&D employees, who might use this...

We consider a simple dynamic model of environmental taxation that exhibits time inconsistency. There are two categories of firms, Believers, who take the tax announcements made by the Regulator to face value, and Non-Believers, who perfectly anticipate the Regulator's decisions, albeit at a...

As Posner (1997) has observed, when individuals in a relationship can commit to imposing costs upon each other then efficient behavior in the absence of law is possible. The question is whether efficient norms of behavior evolve endogenously in a population. We show that in a standard hold up...

We consider the impact of local and global spillover effects on the long run market shares of two populations of firms (e.g.~firms based in two different regions) who compete on a high-tech market. Production costs of a firm are (strongly) influenced by the number of local firms and (weakly) by...

We consider a continuous-time version of Ireland's Neo-Keynesian reinterpretation of the seminal Kydland-Prescott model, assuming now an heterogenous private sector. In each period, a fraction of the private agents naively believes the policy announcements made by the government. The other...