Various forms of substitutability are essential for establishing the existence of equilibria and other useful properties in diverse settings such as matching, auctions, and exchange economies with indivisible goods. We extend earlier models' definitions of substitutability to settings in which...

In a general model of trading networks with bilateral contracts, we propose a suitably adapted chain stability concept that plays the same role as pairwise stability in two-sided settings. We show that chain stability is equivalent to stability if all agents' preferences are jointly fully...

We revisit the classic problem of tax competition in the context of federal nations, and derive a positive theory of partial decentralization. A capital poor median voter wants to use capital taxes to provide public goods. This results in redistributive public good provision. As a consequence,...

Drawing on classical insights from mechanism design, we show that ex post efficient mechanisms induce agents to make efficient ex ante investment choices if and only if they are strategy-proof. For mechanisms that fail to be exactly strategy-proof and/or efficient, we derive a correspondence...

Firms often find it valuable to lock in repeat consumers, and they often do so via loyalty programs such as frequent-flyer miles or discounts for returning consumers. We introduce a model of loyalty programs in the presence of competition and show that, surprisingly, such programs result in...

The Coase Theorem predicts that, if there are no transaction costs, parties will always contract their way to an efficient outcome. Thus, no matter which legal rules society chooses, "Coasean bargains" will lead to efficient results. There are always some transaction costs. However, transaction...

We study the effect of different centralized public school choice mechanisms on schools’ incentives for quality improvement. To do so, we introduce the following criterion: A mechanism respects improvements of school quality if each school becomes weakly better off whenever that school...