In a recent paper Mujumder (2004, Economics Letters) argued that only if the industry is a monopoly, we could be certain that the government could use profit tax to make up any shortfall in tariff revenue and also make the consumers and producers better off. We show that this result is not...

We show the effects of entry of a domestic firm and a foreign firm on welfare, in presence of licensing. In case of licensing with up-front fixed-fee, domestic entry increases welfare if the technological differences between the firms are not very large, whereas foreign entry increases welfare...

This paper shows that if number of firms is determined endogenously, Cournot competition generates higher welfare compared to Bertrand competition when products are sufficiently differentiated. If products are close substitutes, welfare is higher under Bertrand competition. We show that the...

A second-generation model of currency crises is combined with a standard model ofbanks as providers of insurance against liquidity risk. In a pegged exchange rateregime, after funds have been committed to the banks, news arrives about the qualityof the banks’ assets and about the exchange rate...

The paper shows that there is a close connection between (constant)consistent conjectures in a given game and evolutionary stabilityof conjectures. Evolutionarily stable conjectures are consistent andconsistent conjectures are the only interior candidates for evolutionarystability...

This paper provides an analytical framework for exploring the relationshipbetween equity and efficiency for two riparians sharing a transboundary river.Decreasing marginal productivities of water make a noncooperative approach inefficientwhen water is scarce. If the upstream riparian uses its...

We explore the relation between two 'rationality conditions' for stochastic choicebehaviour: regularity and the weak axiom of stochastic revealed preference (WASRP). We show thatWASRP implies regularity, but the converse is not true. We identify a restriction on the domain ofthe stochastic...

The interpretation of the correlation between cash flow and investment is highly controversial. Some argue that it is caused by financial constraints, others by the correlation between cash flow and investment opportunities that are not properly measured by Tobin’s Q...

This paper examines the interactions between Foreign Direct Investment (FDI), inequality, and growth, both from a theoretical and an empirical point of view. We set up a growth model of a dual economy in which the traditional (agricultural) sector uses a diminishing returns technology, while FDI...

This paper shows that technology licensing may be socially undesirable. Possibility of licensing increases the incentive for entry and thus, increases competition. If technology of the incumbent and entrant is sufficiently close, licensing-induced entry reduces social welfare. Otherwise,...