This paper analyses the formation of trading groups in a bilateral market with strategic traders. A trading structure (a partition of the set of traders into trading groups) is strongly stable if no coalition of traders can deviate and increase the utility of some of its members while making no...

This paper analyzes the formation of cartels of buyers and sellers in a simple model of trade inspired by Rubinstein and Wolinsky's (1990) bargaining model. When cartels are formed only on one side of the market, there is at most one stable cartel size. When cartels are formed sequentially on...

We study a model of sovereign debt crisis that combines problems of creditor co-ordination and debtor moral hazard. Solving the sovereign debtor’s incentives leads to excessive ‘rollover failure’ by creditors when sovereign default occurs. We discuss how the incidence of crises might be...

Is the result that equilibrium trading outcomes are efficient in markets without frictions robust to a scenario where agents' beliefs and plans aren't already aligned at their equilibrium values? In this paper, starting from a situation where agents' beliefs and plans aren't already aligned at...

In this paper we discuss global climate change mitigation that builds on existing unilateral actions to deliver ever deepening emission cuts over time. A wide array of unilateral environmental measures have been documented. We discuss the rationale for such measures and argue that unilateral...

At present, the enhanced HIPC initiative and the Gleneagles Proposal for debt write-downs by the G8 are the main mechanisms used to reduce indebtedness of low-income countries. In these countries where poor governance is a key issue, it is naïve to believe that the Millennium Development Goals...

We study the effect of strengthening CACs in a debt rollover model of a sovereign debt crisis. Conditional on default, there are multiple equilibria: the impact of strengthening CACs depends critically on the prevailing equilibrium. For a subset of equilibria, (i) given a fixed number of...

This paper studies a model of dynamic network formation when individuals are farsighted : players evaluate the desirability of a “current” move in terms of its consequences on the entire discounted stream of payoffs. We define a concept of equilibrium which takes into account far-sighted...

We provide a model of the links between commercialisation and technological progress, which is consistent with the historical evidence and places market relations at the heart of the industrial revolution. First, commercialisation raised wages as a growing reliance on impersonal labour market...

In a model with both issues of sovereign debtor moral hazard and creditor coordination under incomplete information, we show that the resulting conflict between ex ante and interim efficiency limits the welfare impact of strengthening CACs. Conditional on default, we show that an interim...