This short paper extends the analysis of Morgan and Tumlinson (2018) to the setting of a small open economy. We show that in this economy featuring endogenous free entry of firms: (1) Both the number and production of firms is socially optimal. Furthermore production is efficient --- it...

Why do individuals participate in charitable gambling and state-run lotteries? In contrast to previous explanations that rely on risk-preference or pure love of gambling motives, we present a model where risk-neutral expected utility maximizers explicitly recognize that lotteries are being used...

When viewed as taxes, lotteries are routinely criticized as being both inequitable and inefficient. But is this an entirely fair comparison? Frequently lotteries are used in lieu of voluntary contributions by private charities and governments when taxes are not feasible. In this paper, a model...

Friedman (1970) suggests that firms ought not divert profits towards public goods since shareholders can better make these contributions themselves. Despite this, activist shareholders are increasingly successful in persuading firms to be "socially responsible." We study firm behavior when...