The seminal work of Fudenberg and Tirole (1985) on how preemption erodes the value of an option to wait raises general questions about the relation between models in discrete and continuous time and thus about the interpretation of its central result, relying on an "infinitely fine grid". Here...

In this paper we look at both the theoretical and empirical behaviour of price-cost margins when capital market imperfections affect firms' markup policies. We present a model of a firm operating in an industry with differentiated products and facing imperfect markets for financing operations....

We study the implications of credit constraints for the sustainability of product market collusion in a bank-financed oligopoly in which firms face an imperfect credit market. We consider two situations, without and with credit rationing, i.e., with a binding credit limit. When there is credit...

We formally link insurance markets with product markets and identify a demand effect of insurance: if risk-averse consumers can buy insurance against possible product failure, there will be some additional consumers that buy the product because they can also purchase protection. The concomitant...

This paper characterizes long-run outcomes for broad classes of symmetric games, when players select actions on the basis of average historical performance. Received wisdom is that when agent's interests are partially opposed, behavior is excessively competitive: ``keeping up with the Jones' ''...

I analyze two opposing effects of firm dynamics on productivity over the business cycle. Consider net exit, on the one hand it reallocates resources to incumbents whose productivity improves through scale economies, on the other hand it reduces the competitive pressure incumbents face which...

I develop a model of dynamic firm entry, oligopolistic competition and returns to scale in order to decompose TFP fluctuations into technical change, economic profit and markup fluctuations. I show that economic profits cause short-run upward bias in measured TFP, but this subsides to upward...

The hypothesis of market power in the Norwegian primary aluminium industry is tested using plant-level panel data. Economies of scale are found to be present, and Norwegian aluminium plants charge a procyclical price-cost margin that significantly exceeds zero. Consequently, the simple...

This paper analyses how changes in market structure have affected the margins (measured by the Lerner index) of Norwegian aluminium plants. Instead of showing the expected negative trend, due to increased competition internationally, the margins are found to move procyclically around a constant...