We consider an economy with two language groups, where only agents who share a language can produce together. Schooling enhances the productivity of students and may modify their language endowment. Under a unilingual system, the language of the politically dominant group is the only language of...

The capacity of the transmission network determines the extent of integration of a multinational energy market. Cross-border externalities render coordination of network maintenance and investments across countries valuable. Is it then optimal to collect powers in the hands of a single...

"This paper explores the consequences for quality of introducing yardstick competition in duopoly when a verifiable quality indicator is available. Yardstick competition can be implemented by a menu of transfers that are linear in the cost differential between the two firms and in quality. Cost-...

In a game-theoretic framework, we analyse the circumstances under which self-enforcing redistribution and power-sharing coalitions can be used to peacefully resolve ethnic conflict. The existence of a pacific equilibrium depends crucially on ethnic diversity (the number of ethnic groups). The...

This paper analyses simultaneous regulation of cost and quality when firms have private, correlated information about productivity and the regulator receives a signal about quality. It is shown that managerial effort and expenditures on quality are positively correlated in the optimal contract....

We consider an economy with two language groups, where only agents who share a language can produce together. Schooling enhances the productivity of students. Individuals attending a unilingual school end up speaking the language of instruction only, whereas bilingual schools render individuals...

We construct a model in which a number of equally powerful ethnic groups compete for power by engaging in civil war. In non-redistributive equilibrium, ethnically homogeneous and ethnically diverse countries face a lower probability of civil war than countries with a moderate degree of ethnic...

We analyse voter turnout as a function of referendum types. An advisory referendum produces advice that a legislature may or may not take into account when choosing between two alternatives, whereas a binding referendum generates a decisive decision. In theory, voter turnout should be higher...

This paper analyses the incentives for collusion when an industry is regulated by means of yardstick competition. The central assumption is that firms must write collusive side contracts before the revelation of private information and are unable to communicate later. It is shown that optimal...