Do intermediate goods help explain relative and aggregate productivity differences across countries? Three observations suggest they do: (i) intermediates are relatively expensive in poor countries; (ii) goods industries demand intermediates more intensively than service industries; (iii) goods...

We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and ?managers?, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of...

We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and managers, each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of...

This paper is an investigation into the dynamics of asset markets with adverse selection à la Akerlof (1970). The particular question asked is: can market failure at some later date precipitate market failure at an earlier date? The answer is yes: there can be “contagious illiquidity” from...

Adverse selection may thwart trade between an informed seller, who knows the probability p that an item of antiquity is genuine, and an uninformed buyer, who does not know p. The buyer might not be wholly uninformed, however. Suppose he can perform a simple inspection, a test of his own: the...

This paper presents a model of a self-fulflling price cycle in an asset market. Price oscillates deterministically even though the underlying environment is stationary. The mechanism that we uncover is driven by endogenous variation in the investment horizons of the different market...

This paper considers a long-term relationship between two agents who both undertake a costly action or investment that together produces a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. Two cases are considered: (i) where agents are risk...

Proponents of proportional electoral rules often argue that majority rule depresses turnout and may lower welfare due to the 'tyranny of the majority' problem. The present paper studies the impact of electoral rules on turnout and social welfare. We analyze a model of instrumental voting where...

We study the incentive to invest to improve marriage prospects, in a frictionless marriage market with non-transferable utility. Stochastic returns to investment eliminate the multiplicity of equilibria in models with deterministic returns, and a unique equilibrium exists under reasonable...

We reformulate neoclassical consumer choice by focusing on lamda, the marginal utility of money. As the opportunity cost of current expenditure, lamda is approximated by the slope of the indirect utility function of the continuation. We argue that lamda can largely supplant the role of an...