We propose a clarification of the notion of a soft budget constraint, a concept widely used in the analysis of socialist, transitional, and market economies. Our interpretation is broad enough to embrace most existing approaches to soft budget constraint phenomena and provides a classification...

We argue that when discoveries are "sequential" (so that each successive invention builds in an essential way on its predecessors) patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such...

We build a simple model to capture the major virtues and drawbacks of making public officials accountable (i.e., subjecting them to reelection): On the one hand, accountablity allows the public to screen and discipline their officials; on the other, it may induce those officials to pander to...