This article presents an electricity dispatch model with endogenous electricity generation capacity expansion for Germany over the horizon 2010-2035. The target is to quantify how fuel and carbon price risk impacts investment incentives of thermal power plants. Results point to findings which...

This paper analyzes the interaction of direct and indirect risk selection in health insurance markets. It is shown that direct risk selection - using measures unrelated to the benefit package like selective advertising or 'losing' applications of high risk individuals - nevertheless has an...

This paper analyzes a duopoly model with stochastic demand in which firms first choose their strategy variable and compete afterwards. Contrary to the existing literature, we show that firms do not always choose a quantity which is the variable that induces a smaller degree of competition. The...

We examine an environmental policy which may be revisited by a new administration. We allow for pollution to be persistent over time and for uncertainty in next period's environmental policy. When pollution is non-persistent, we show that regulatory uncertainty is inconsequential for output,...

In a game-theoretic model where agents compete for claims to a consumption stream, we characterize how creative destruction affects risk, wealth, and prices. Overinvestment not only imposes excessive disruption risk on existing assets and higher technological uncertainty, it also increases the...

This paper proposes an n-firm homogeneous-good Bertrand model with private information about costs. The model allows for any non-negative correlation between the cost draws and for any demand elasticity but still yields a closed-form solution. The solution is simple, in pure strategies, and...

We analyze strategic relationships between buyers and sellers in markets with switching costs and dynamic uncertainty by investigating the scenario wherein a representative buyer trades with two foreign sellers located in the same foreign country. We show that, under exchange rate uncertainty,...

This paper examines how the degree of competition among firms in an industry affects the optimal incentives that firms provide to their managers. A central assumption is that there is free entry and exit in the industry, which implies that changes in the nature of competition lead to changes in...

This paper examines the liability and labeling approaches to regulating product safety. Stronger product liability increases producer care, which then has a negative lulling effect on consumer attention to warning labels. By contrast, more visible warning labels increase such consumer care,...

When public long-term care (LTC) insurance is provided by insurers, they typically lack incentives for purchasing cost-effective LTC. Providing insurers with appropriate incentives for efficiency without jeopardizing access for high-risk individuals requires, among other things, an adequate...