Open source software (OSS) is a public good. A self-interested individual would consider providing such software, if the benefits he gained from having it justified the cost of programming. Nevertheless each agent is tempted to free ride and wait for others to develop the software instead. This...

This paper shows that stricter enforcement may increase tax evasion. Individuals vote on a linear income tax which is used to finance lump sum transfers. Stricter enforcement may make redistributive taxation more attractive to the decisive voter. The tax rate and transfer may rise which in turn...

A new method for constructing R&D capital stocks is proposed. Following Schumpeter, the development of R&D capital stocks is modelled as a process of creative destruction. Newly generated knowledge is assumed not only to add to the existing R&D capital stocks but also, by displacing old...

Becker and Murphy (1988) constructed, in a well-known paper, a model of rational addiction in which people solve a dynamic optimization problem, choose an optimal timepath of drug consumption and thereby maximize lifetime utility. The model leads to the hypothesis that future consumption is a...

The main objective of this paper is to understand the causes and symptoms of currency crises by reviewing its seminal literature, establishing its determinants, and outlining some of the relevant issues. The paper highlights the need to comprehend the process, which may lead to the inconsistency...

We study the political economy of commuting subsidies in a model of a monocentric city with two income classes. Depending on housing demand and transport costs, either the rich or the poor live in the central city and the other group in the suburbs. Commuting subsidies increase the net income of...

This paper argues that - in contrast to an often expressed view - the formation of larger and more powerful buyers need not reduce welfare by stifling suppliers´ incentives. If contracts are determined in bilateral negotiations, the presence of larger buyers may both increase...

Reliable information on small and medium sized enterprises (SMEs) is rare and costly for financial intermediaries. To compensate for this, relationship banking is often considered as the appropriate lending technique in the case of SMEs. In this paper we offer a theoretical model to analyze the...

In this paper, we consider fiscal competition between jurisdictions. Capital taxes are used to finance a public input and two public goods, one which benefits mobile skilled workers and one which benefits immobile unskilled workers. We derive the jurisdictions? reaction functions for different...

Matching has become a popular approach to estimate average treatment effects. It is based on the conditional independence or unconfoundedness assumption. Checking the sensitivity of the estimated results with respect to deviations from this identifying assumption has become an increasingly...