In this paper a model of aggregate investment is derived, which incorporates fixed investment costs and capital market imperfections on the micro-level. Aggregate investment reacts nonlinearly with respect to aggregate shocks to productivity and liquidity of firms. Employing nonparamatric kernel...

Consider an economy in which households differ in behavior and disposable income: (i) we derive conditions on the joint distribution of both characteristics such that the Law of Demand holds for aggregate demand. We obtain that the poorer the household the less its behavior affects the structure...

The agglomeration of industries has received much interest both in empirical and theoretical work in recent time. Especially in Germany politicians became inspired by the notion of high-technology industry clusters and German regional policy has seen a wave of initiatives aiming at the formation...

We analyze group contests for public goods by applying the solution concept of an evolutionary stable strategy (ESS). We show that a global ESS cannot exist, because a mutant free-rider can always invade group behavior succesfully. There does exist, however, a unique local ESS, which we identify...

This paper tests the hypothesis that product market competition has a negative impact on spatial agglomeration. This hypothesis emerges as an interpetation of the models by Combes and Duranton (2001) and Alsleben (2005) which are about firms' location choice in the presence of knowledge...

This paper examines exercise policies for capacity reduction options in a duopolistic market that is subject to aggregate shocks. Firms face an inverse demand that exhibits second-mover advantages rather than the complementary property of first-mover advantages commonly assumed in the literature...

We study rent-seeking contests, where the set of players contains both players with independent preferences and players with interdependent preferences. It turns out that the latter experience a strategic advantage in general two-player contests and in n-player-contests with non-increasing...

This paper develops a tractable dynamic microeconomic model of migration decisions that is aggregated to describe the behavior of interregional migration. Our structural approach allows us to deal with dynamic self-selection problems that arise from the endogeneity of location choice and the...

The present paper studies a multi-jurisdictional framework, in which, from a federal perspective, educational subsidies turn out to be efficiency enhancing. However, in the presence of mobile high-skilled labor, local jurisdictions might try to free-ride on other regions´education policies and...

We characterize the equilibrium of the all-pay auction with general convex cost of effort and sequential effort choices. We consider a set of n players who are arbitrarily partitioned into a group of players who choose their efforts ’early’ and a group of players who choose ’late’. Only...