One of the long-standing puzzles in economics is why wages do not fall sufficiently in recessions so as to avoid increases in unemployment. Put differently, if the competitive market wage declines, why don't employers simply force their employees to accept lower wages as well? As an alternative...

Yang s theory of economic specialization under increasing returns to scale (Yang 2001) is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labor.In this theory specialization and, thus, the social division of labor is firmly...

We determine the equilibrium in two transaction mechanisms: auctions and posted prices. Agents choose whether to participate in markets where trades are consummated by auctions or in markets where sellers post prices. We show that the selling mechanisms are practically equivalent. Previous...

In a common agency game a set of principals promises monetary transfers to an agent which depend on the action he will take. The agent then chooses the action, and is paid the corresponding transfers. Principals announce their transfers simultaneously. This game has many equilibria; Bernheim and...

Suppose two parties have to share a surplus of random size.Each of the two can either commit to a demand prior to the realization of the surplus - as in the Nash demand game with noise - or remain silent and wait until the surplus was publicly observed.Adding the strategy to wait to the noisy...

In this paper we study competitive outcomes and endogenous coalition formation in a cooperative n-person transferable utility (TU) game from the viewpoint of general equilibrium theory.For any given game, we construct a competitive exchange coalition production economy corresponding to the game....