In an economy with a finite population or with a finite number of homogenous groups, taxpayers may either act competitively or react strategically to a linear income tax schedule. Strategic reaction to the tax policy of the government leads to an implementability problem for marginal tax rates...

The paper analyzes the canonical hold-up model of Hart and Moore (1988) under the assumption that the courts can verify delivery of the good by the seller. We show that the first best can be achieved using simple "option contracts" which give the seller the right to decide whether or not trade...

This article examines the validity of a gains from trade proposition in a world in which the direction of technological change is determined endogenously. We first give an extreme example in which a part of the world that would smoothly develop under autarchy forever remains underdeveloped under...

The game theoretic discussion of best price clauses has alway implicitly been based on a durable good model with one generation of consumers. This paper argues that the intuition derived from this set up is misleading. By comparison with an overlapping generation model it is shown that the one...