We analyze the effects of asymmetric switching costs on two identical firms that produce an homogeneous good and compete in prices. Both firms inherit a fraction of the market which is “locked-in” by the switching costs. When switching costs are low, firms face a tradeoff between charging a...

This paper presents a simple model that shows the effects of financial liberalization on the credit market of a small, relatively capital poor economy. The empirical evidence regarding the effect of foreign bank entry is mixed. Some studies show that financial liberalization leads to an increase...

A growing number of roads are currently financed by the private sector via Build-Operate-and -Transfer (BOT) schemes. When the franchised road has no close substitute, the government must regulate tolls. Yet when there are many ways of getting from one point to another, regulation may be avoided...

We consider a two-period model of a banking system to explore the effects of competition on the stability and efficiency of economic activity. In the model, competing banks lend to entrepreneurs. After entrepreneurs receive the loans for their projects, there is a probability of a shock. The...