It has been argued that collusion among the members of an organization or a vertical structure creates efficiency losses, and hence should be prevented. This paper shows that whenever collusion takes the form of co-insurance agreements, here called ?friendships?, among the members of a vertical...

We study wage determination in a job-matching model, under the assumption that wages may be continuously renegotiated, so as to reflect the employee's endogenous outside option. We characterize the unique equilibirum of the model and we analyse the distribution of producer surplus. The model is...

Using subdifferentials we develop a marginal-analytical approach to equilibrium and use it in the commodity space L? to derive new results on the representation of prices by a density. Apart from conferring advantages when the intepretation of prices as marginal costs is required, the calculus...

A new and powerful dictatorship result is presented. It is well known that in social choice problems, the negativism of the original Arrow result can be overcome by admitting information based on interpersonal comparisons. But what if individuals in society have different opinions about htese...

The paper develops and discusses a two-sector general equilibrium growth model of a "transit economy" which is subjected to an external price shock. The assumed behavioural charactertistic of such an economy is the presence of a distributional rigidity rather than the more commonly assumed...

The standard Wong-Viner envelope theorem is of little use in the context of production with multiple outputs because the differentiability assumptions its builds on are so severely restrictive that even the simplest of applications fail to satisfy them. Common sources of this failure are...

We propose a new bankruptcy procedure. Initially, a firm's debts are cancelled, and cash and non-cash bids are solicited for the "new" (all-equity) firm. Former claimants are given shares, or options to buy shares, in the new firm on the basis of absolute priority. Options are exercised once the...

The welfare economic method for analyzing the case for government intervention is often criticised for ignoring the political determination of policies. The standard method of accounting for this critique studies the case for intervention under the constraint that the level of the instrument in...

This paper proposes a model of wealth distribution dynamics with a capital market imperfection and a production function where public capital is complementary to private capital. A unique invariant steady-state distribution is derived, with three social classes: subsistence workers, 'government...

The Two-Sided Perfect Matching model is generalised to an Imperfect Matching model with search frictions. A search model is proposed which is characterised by bilateral search and vertical heterogeneity and allows for a generally specified utility function. The fundamental result is that with...