This paper explores panel data on advertising and product pricing for firms in the compact disc player market over the period 1983-92. The data reveal that, for the typical CD player, advertising and price move together, with both rising initially and remaining above introductory levels for...

This paper develops and analyzes a macroeconomic model in which aggregate growth and fluctuations arise from the discovery and diffusion of new technologies; there are no exogenous aggregate shocks. The temporal behavior of aggregates is driven by individuals' efforts to innovate and/or make use...

We analyze a multiple-activity principal-agent model in which the activities are naturally substitutable for the agent and complementary for the principal. A basic result is that the optimal compensation mechanism must cause the agent to view the activities as complements. This complementarity...