Theory predicts that optimal effective corporation tax rates will be negatively related to industry specific sunk costs, and hence industry concentration. Governments should tax industries with monopolistic power softly. Evidence suggests that this Schumpeterian (1942) principle of corporate...

When the debt of firms in distress is dispersed, a restructuring agreement is difficult to reach because of free riding. We develop a repeated game in which banks come across each other frequently, allowing them to threaten a punishment in case of free riding. As the number of lending banks...

In this paper we use a non-tatonnement dynamic macroeconomic model to study the role of inventories, expectations and wages in the business cycle. Following a restrictive monetary shock, by amplifying spillover effects inventories may imply that the economy converges to a deflationary locally...

We introduce persuasive advertising in a duopoly market of di⁄erentiated harmful goods, where rms compete on prices and advertising. Since advertising arti cially in ates consumers demand, there is over-consumption of sin goods. We rst show how introducing an excise tax increases consumers...