This study explores the implications of rising markups for optimal Mirrleesian income and profit taxation. Using a stylized model with two individuals, the main forces shaping welfare-optimal policies are analytically characterized. Although a higher profit tax has redistributive benefits, it...

This paper studies a sole proprietorship economy with imperfect competition in a transferable utility setting. While consumers behave as price takers, producers issue real assets strategically to maximize their own utility. Even when complete markets are technologically feasible, equilibria with...

In oligopoly models with differentiated products, producers face a market demand function that reflects the preferences of consumers. However, typical assumptions on preferences place only weak restrictions on the shape of aggregate demand. This may result in profit functions that are not...

In this paper, we have presented a generalization of Bucci's (2003) model in which have disentangled the monopolistic mark-up in the intermediate goods sector, the intermediate goods share in the final output and the returns to specialization in order to have a better measurement of competition....

This paper provides a novel rationale for the regulation of market size when heterogeneous firms compete. A regulator seeks to maximize total welfare by choosing the number of firms allowed to enter the market, e.g. by issuing a certain number of licenses. Opening up the market for more firms...

The standard approach to nominal illusion in Economics sees it as a transitory phenomenon, as economic agents eventually see through the nominal veil, making the right choices. Recent empirical studies suggest that money illusion may persist, distorting real prices in a variety of economic...

Dispersion in retail prices of identical goods is inconsistent with the standard model of price competition among identical firms, which predicts that all prices will be driven down to cost. One common explanation for such dispersion is the use of a loss-leader strategy, in which a firm prices...

The experimental literature on antitrust enforcement provides robust evidence that communication plays an important role for the formation and stability of cartels. We extend these studies through a design that distinguishes between innocuous communication and communication about a cartel,...

We develop a nonlinear duopoly model in which the heuristic expectation formation and learning behavior of two boundedly rational firms may engender complex dynamics. Most importantly, we assume that the firms employ different forecasting models to predict the behavior of their opponent....

We analyze 15 German cartels, focusing on the personal characteristics of the individual participants, the methods and frequency of communication as well as the internal organizational structures within the cartels and their eventual breakup. Our results indicate that cartel members are highly...