Environmental policies frequently target the ratio of dirty to green output within the same industry. To achieve such targets the green sector may be subsidised or the dirty sector be taxed. This paper shows that in a monopolistic competition setting the two policy instruments have different...

This paper discusses the eastward enlargement process of the EU in the framework of a simple war of attrition bargaining game. Both players – the existing EU members and the applicants – benefit from enlargement, yet for the applicants reform to the acquis is costly, while the EU prefers...

The goal of this work is to introduce one of the most successful among recently developed statistical techniques - the support vector machine (SVM) - to the field of corporate bankruptcy analysis. The main emphasis is done on implementing SVMs for analysing predictors in the form of financial...

Recently the software industry has experienced fundamental changes in market structure through the entry of open source competitors, e.g. Linux‘s entry into the operating systems market. In a simple model we examine the effects of such a change in market structure from monopoly to duopoly...

Soft budget constraints (SBCs) are a persistent feature of transition economies and have been blamed for i.a. a lack of fiscal consolidation and sluggish growth. EU eastward enlargement has - among other things - been conditioned on tackling SBCs. This paper analyzes such outside conditionality...

This note explores the relationship between the price elasticity of demand and the R&D intensity of the product. We introduce the concept of R&D intensity into a standard Dixit-Stiglitz/Krugman-type setting. R&D activity is treated as a fixed cost of production. Within this framework, sectors...

This paper investigates the effect of economic integration on the ability of firms to maintain a collusive understanding about staying out of each other?s markets. The paper distinguishes among different types of trade costs: ad valorem, unit, fixed. It is shown that for a sufficient reduction...

This paper investigates the effects of labor market integration, in the form of worker mobility, in a model with long-term labor contracts that lead to wage rigidities and unemployment. Reflecting the interdependence of regional labor markets, we develop a general-equilibrium framework where the...

We present a formal model of symmetric n-firm Cournot oligopoly with a heterogeneous population of profit optimizers and imitators. Imitators mimic the output decision of the most successful firms of the previous round a la Vega-Redondo (1997). Optimizers play myopic best response to the...

We define a generalized state-space model with interactive unawareness and probabilistic beliefs. Such models are desirable for many potential applications of asymmetric unawareness. We develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are...