We analyse the optimal antitrust enforcement against collusion under asymmetric information with a continuum of types. We focus on prudential deterrence, by imposing that expected fines cannot induce losses even off the equilibrium path. Due to incentive compatibility, efficient cartels enjoy...

This paper studies the border between shadow employment and unemployment, and argues that the two macroeconomic phenomena are two faces of the same coin, in the sense that any policy aimed at reducing the former will increase the latter. Theoretically, it proposes and solves a matching model of...

Has the spurt of IT-centered innovations of the 1990s resulted in sizably higher productivity growth? This question, first raised in the US and later on in Europe and the rest of the world, has not been given a firm answer yet. This paper adds to the evidence on Europe by looking at a seemingly...

The dramatic rise in the US social security and public health expenditure is only partially explained by the demographic trend, and may be due to the political complementarity between these two programs. We suggest that public health care increases the political constituency in favor of social...

Observed fiscal policy reflects the incentives embedded in political institutions. In this paper, we illustrate the effects of two general institutional features: separation of powers, which is common in Presidential-Congressional political systems, and legislative cohesion, which is typical of...

We propose a general formal structure for symmetric information delegation games that encompasses many existing economic applications in the fields of oligopoly theory, the theory of the firm, strategic trade policy and international political economy. We prove that all individually rational...

This paper surveys the recent literature on the theory of macroeconomic policy. We study the effect of various incentive constraints on the policy making process, such as lack of credibility, political opportunism, political ideology, divided government. The survey is organized in three parts:...

A feature of new economic geography model is their mathematical intractability. This intractability results from the fact that the functional relationship between the indirect utility differential and the state variable cannot be found explicitly. We illustrate three methods that can be utilized...

We analyze the effort allocation choices of incumbent politicians when voters are uncertain about politician preferences. There is a pervasive incentive to “posture” by overproviding effort to pursue divisive policies, even if all voters would strictly prefer to have a consensus policy...

Existant studies of confl ict, negotiation and international relations do not take into account that the institutions used to resolve disputes shape the incentives for entering disputes in the first place. Because engagement in a costly and destructive war is the `punishment' for entering a...