Our companion paper introduced a new general equilibrium concept, called PDME, in which a natural monopoly maximizes its industry's surplus. While PDME's are always efficient, decentralization and existence sometimes fail under increasing returns to scale. This paper derives conditions under...

In this paper we show how short term contracts can reproduce the payoffs under optimal long term renegotiation proof contracts in the context of adverse selection. The result requires that the principal and the agent form a joint venture in period one. It also requires the existence of a...

I provide new existence and welfare results for the Kiyotaki-Wright model (JPE, 1989). Previous work on the model has focused almost exclusively on steady-states and has established the existence of multiple steady-states. Moreover, welfare comparisons among steady-states are of dubious...

Participation in a social program, like that in clubs and other social organizations, is the result of a process in which an agent first learns about the requirements, benefits, and the likelihood of acceptance, applies for membership, and finally is accepted or rejected. At each stage of the...

Consider a one step forward looking self-referential model with a one dimensional state variable where the information set available to agents when they make their forecast for the next period includes the current realization of an extrinsic random process but does not include the current value...

This paper investigates the effect of a generous demogrant for the elderly that started in 2001 in Mexico City on the labor supply and time use of the elderly and of non-elderly family members who live with them. Using data for the period 2000-2004 and a triple differences approach, I find that...

Recently, much of the empirical research on money demand has been centered on the question of whether the demand for money is a stable relationship. The importance of this issue is underscored when modeling the demand for narrow money in countries such as Mexico, given that its economic...

For several decades, the Theory of International Trade has elaborated its models and propositions using mostly (what we can refer to as) a classical assumption regarding the type of commodities which represent the world trade pattern: international trade takes place in final consumption goods....

The access pricing problem emerges when a vertically integrated firm (the incumbent) provides an essential service in the upstream market, to an entrant. Both firms produce a final service and compete in the downstream market. The standard treatment of this problem has been to add the access...

Models of linear price competition predict that competing firms always have incentives to merge. Moreover, if the goods sold are substitutes (complements) mergers are socially detrimental (beneficial). In this paper we analyze these conjectures when the firms are allowed to set non-linear...