The paper examines under what conditions vertically differentiated duopolists engage in first-degree price discrimination. Each firm decides on a pricing regime at a first stage and sets prices at a second stage. The paper shows that when unit cost is an increasing and convex function of...

Summary The improved international tradability of services and the better protection of intellectual property rights - both of which have been results of the Uruguay Round - increase the international tradability of know-how. This paper investigates the economic impact of this. It is shown that...

Abstract This paper considers duopolists targeting informative messages to consumers who share information locally with their network neighbors. A monopolist targets a parsimonious set of nodes that informs all consumers either directly or by word-of-mouth. A duopolist faces a tradeoff between...

Abstract We study how quality uncertainty among consumers affects price competition in the presence of network effects. Our main result is that quality uncertainty has non-monotonic effects on firms’ price setting behavior. Prices and industry profit is first falling, then increasing, in...

Abstract This paper investigates the optimal general income tax and audit policies when poverty is considered a public bad in an economy with two types of individuals whose income may not be observed. Our results depend on whether poverty is measured in absolute or in relative terms. For a...

Summary In the present paper, I analyse the competitive behaviour of benevolent governments in the presence of (capital) income tax evasion when information exchange is not possible. My approach is to introduce a cost of evasion function into an otherwise standard tax competition model and to...

Abstract The paper extends the tourist test proposed by Rochet and Tirole (2011) to the situation of emerging countries which are characterized by informality (tax evasion through cash payments). We introduce a government which faces a cost associated to cash (resources to fight against crime...

Abstract This paper presents a first estimation of the tourist test threshold for interchange fees that makes Peruvian small merchants indifferent between accepting cash and debit cards at the point of sale. We use the tourist test model (initially proposed by Rochet and Tirole), including tax...