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This paper questions how heterogeneity of beliefs about the probability of loss affects equilibrium insurance contracts, firm behavior, and welfare focusing especially on the effect of optimism when a monotonicity property, which is a major assumption of prior work, is violated. This paper shows...
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monopolist has incomplete information and cannot implement the monopoly outcome: The expected pre-merger equilibrium price of the … downstream product is lower than the monopoly price. After a vertical merger, the equilibrium input price that is charged to the …, respectively. However, in all cases the equilibrium price of the downstream product increases to the monopoly price. Therefore, the …
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We examine the incentives for a government to levy an optimal tariff on a foreign monopolist. With complete information, the home government uses tariffs to extract rents and therefore implements a policy of discriminatory tariffs entailing higher tariffs on more efficient firms. By contrast if...
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This paper illustrates the intricacies associated with the design of revenue-maximizing mechanisms for a monopolist who expects her buyers to resell in a secondary market. We consider two modes of resale: the first is to a third party who does not participate in the primary market; the second is...
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