Summary We consider a market with a profit-maximizing monopolistic firm. Utility-maximizing consumers either buy one unit of the good or none at all. The demand for the good is influenced by local social interactions. That is, the utility which a consumer derives from the consumption of the good...

We consider a market with a profit-maximizing monopolistic firm. Utility-maximizing consumers either buy one unit of the good or none at all. The demand for the good is influenced by local social interactions. That is, the utility which a consumer derives from the consumption of the good depends...

We investigate the impact of advertising in a simple static differentiated duopoly model. First, we consider the Nash equilibrium of the situation in which the duopolistic firms compete simultaneously with two instruments, i.e. the prices and the advertising expenditures. Second, we examine the...

It is known that the option of delegation in a rent-seeking contest between two individuals leads to a prisoner’s dilemma. In equilibrium no player hires a delegate, while it is Pareto-efficient if both would hire one. This paper shows that this result does not generalize to a contest between...

Abstract : We consider delegation in a rent-seeking contest with two players, where delegates have more instruments at their disposal than the main players. We endogenize both the decision to hire a delegate and the contingent fee offered to the delegates. We characterize the situations when...

The paper considers a (static) portfolio system that satisfies adding-up contraints and the gross substitution theorem. The paper shows the relationship of the two conditions to the weak dominant diagonal property of the matrix of interest rate elasticities. This enables to investigate the...

We consider a winner-take-all contest extended with a principal-agent re-lationship. One of the two players, say player 1, offers a contract to an agent to act in the contest as a delegate on his behalf. The wage offered to the agent is deliberately chosen by player 1. We characterize the Nash...