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We consider a simple dynamic model of environmental taxation that exhibits time inconsistency. There are two categories of firms, Believers, who take the tax announcements made by the Regulator to face value, and Non-Believers, who perfectly anticipate the Regulator's decisions, albeit at a...
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The classical price competition model (named after Bertrand), prescribes that in equilibrium prices are equal to marginal costs. Moreover, prices do not depend on the number of competitors. Since this outcome is not in line with real-life observations, it is known as the Bertrand Paradox. Many...
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students. Authoritative, cutting edge, yet accessible, it guides the reader through theory and evidence, providing engaging and …5 Five theoretical approaches in behavioral economics -- 5.1 A case study of prospect theory -- 5.2 Human sociality and … and Uncertainty -- 1.1 Introduction -- 1.2 The elements of classical decision theory -- 1.2.1 Preference foundations of …
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