ABSTRACT The state of the art of rendering fiat money valuable is either to impose a boundary con... more ABSTRACT The state of the art of rendering fiat money valuable is either to impose a boundary condition or to make the boundary condition unimportant through an infinite sequence of markets so as to circumvent backward induction. We show fiat exchange may nevertheless arise in finite economies if agents have incomplete information about their relative position in the trade cycle or when the barter and autarky equilibria of the one-shot trading round support a monetary equilibrium with repeated trades. Copyright 2002, Oxford University Press.
This paper studies electoral competition in a model of redistributive politics with deterministic... more This paper studies electoral competition in a model of redistributive politics with deterministic voting and heterogeneous voter loyalties to political parties. We construct a natural measure of party strength based on the sizes and intensities of a party’s loyal voter segments and demonstrate how party behavior varies with the two parties’ strengths. In equilibrium, parties target or poach a strict subset of the opposition party’s loyal voters: offering those voters a high expected transfer, while freezing out the remainder with a zero transfer. The size of the subset of opposition voters frozen out and, consequently, the level of inequality in utilities generated by a party’s equilibrium redistribution schedule is increasing in the opposition party’s strength. We also construct a measure of political polarization that is increasing in the sum and symmetry of the parties’ strengths, and find that the expected ex-post inequality in utilities of the implemented policy is increasing in political polarization.
ABSTRACT We examine the implications of replacing the Cournot market clearing assumption with Ber... more ABSTRACT We examine the implications of replacing the Cournot market clearing assumption with Bertrand-Edgeworth behavior when production is time-consuming. The benchmark is Saloner's result that when two firms simultaneously choose quantities in each of two periods before the market clears, every point on the outer envelope of the reaction functions between the Stackelberg outcomes is sustainable in equilibrium (Saloner, 1987). We demonstrate that in a symmetric Bertrand-Edgeworth duopoly, for small capacity costs, except for the leader-follower points, none of the points on the outer envelope of the best responses lying in the mixed strategy region are sustainable in equilibrium.
ABSTRACT The state of the art of rendering fiat money valuable is either to impose a boundary con... more ABSTRACT The state of the art of rendering fiat money valuable is either to impose a boundary condition or to make the boundary condition unimportant through an infinite sequence of markets so as to circumvent backward induction. We show fiat exchange may nevertheless arise in finite economies if agents have incomplete information about their relative position in the trade cycle or when the barter and autarky equilibria of the one-shot trading round support a monetary equilibrium with repeated trades. Copyright 2002, Oxford University Press.
This paper studies electoral competition in a model of redistributive politics with deterministic... more This paper studies electoral competition in a model of redistributive politics with deterministic voting and heterogeneous voter loyalties to political parties. We construct a natural measure of party strength based on the sizes and intensities of a party’s loyal voter segments and demonstrate how party behavior varies with the two parties’ strengths. In equilibrium, parties target or poach a strict subset of the opposition party’s loyal voters: offering those voters a high expected transfer, while freezing out the remainder with a zero transfer. The size of the subset of opposition voters frozen out and, consequently, the level of inequality in utilities generated by a party’s equilibrium redistribution schedule is increasing in the opposition party’s strength. We also construct a measure of political polarization that is increasing in the sum and symmetry of the parties’ strengths, and find that the expected ex-post inequality in utilities of the implemented policy is increasing in political polarization.
ABSTRACT We examine the implications of replacing the Cournot market clearing assumption with Ber... more ABSTRACT We examine the implications of replacing the Cournot market clearing assumption with Bertrand-Edgeworth behavior when production is time-consuming. The benchmark is Saloner's result that when two firms simultaneously choose quantities in each of two periods before the market clears, every point on the outer envelope of the reaction functions between the Stackelberg outcomes is sustainable in equilibrium (Saloner, 1987). We demonstrate that in a symmetric Bertrand-Edgeworth duopoly, for small capacity costs, except for the leader-follower points, none of the points on the outer envelope of the best responses lying in the mixed strategy region are sustainable in equilibrium.
Uploads
Papers by Dan Kovenock