a short proof for the characterization of the core in housing markets we provide a short proof for the following characterization of the core in housing markets first proved by ma 1994 the core is the only rule that satisfies strategy proofness pareto efficiency and individual rationality

distributed energy infrastructure paradigm community microgrids in a new institutional economics context abstract this paper provides a theoretical framework based on new institutional economics nie concepts to guide the development of community microgrids given limited application thus far of such energy systems this paper also draws on empirical studies and experiences from the planning and development of other public community infrastructure and utility services in the development of this framework it links an efficient ownership and governance structure with transactional characteristics such as asset idiosyncrasy frequency and uncertainty defined in section 3 1 the key role of the customers and the microgrid service provider and more specifically their bilateral monopoly relationship and its effects on the choice of institutional structure is highlighted the paper examines the optimum conditions for public private or hybrid financial ownership and for unified or network governance through long term contracting this allows ex ante investment uncertainty and ex post appropriation risks to be efficiently managed the analysis suggests that long term contract completeness future demand for electricity and level of uncertainty are the determining factors in the selection of institutional structure this has significant real world implications for the communities seeking to achieve electricity self sufficiency and environmental benefits through community microgrids service providers and other private or public actors

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

does marriage really make men more productive this paper presents new descriptive evidence regarding marital pay premiums earned by white males longitudinal data indicate that wages rise after marriage and that cross sectional marriage premiums appear to result from a steepening of the earnings profile data from a company personnelfile that includes information on job grades and supervisor performance ratings reveal large marital status pay differences within a narrow range of occupations managers and professionals and environments a single firm married workers tend to be located in higher paying job grades there are very small pay differentials within grades married men receive higher performance ratings than single men as a result they are much more likely to be promoted controlling for rated performance however eliminates the promotion differential sanders korenman is an assistant professor of economics and public affairs at princeton university and is a faculty associate of the office of population research at princeton university and a research affiliate of the national bureau of economic research nber david neumark is an assistant professor of economics at the university of pennsylvania and a research affiliate of the nber korenman wishes to acknowledge the hewlett foundation and the harvard university center for population studies for financial support the authors are grateful to james medofffor making available an extract from the company personnelfile questions regarding data availability should be directed to professor james

two remarks on the property rights literature we first point out that the recent property rights literature is based on three assumptions 1 that contracts are always subject to renegotiation 2 that the exercise of a property right confers a private benefit and 3 that parties are risk neutral building on hart moore 1999 we provide conditions under which an optimal contract consists of nothing more than an assignment of property rights we also examine the robustness of some of the literature s standard predictions about asset ownership to the introduction of mechanisms for eliciting parties ex post willingness to pay for the assets such as options or financial markets to illustrate the issue we revisit the hart moore 1990 proposition that joint ownership is suboptimal and argue that ownership by a single party is dominated by joint ownership with put options

simple contracts renegotiation under asymmetric information and the hold up problem abstract in this article it is demonstrated that voluntary bargaining over a collective decision under asymmetric information may well lead to ex post efficiency if the default decision is non trivial it is argued that the default decision may be interpreted as a simple contract that the parties have written ex ante this result is used in order to show that simple unconditional contracts which are renegotiated may allow the hold up problem to be solved even if the parties valuations are private information

contractual solutions to the hold up problem this paper considers a general version of the hold up problem where n agents first make relation specific investments and then must agree on some collective action it is shown that first best solutions exist under a variety of different assumptions about the nature of information asymmetries

organizational design and technology choice under intrafirm bargaining comment the authors consider a wide number of applications of an intrafirm bargaining game within organizations where employees and the firm engage in wage negotiations under their presumption that contracts cannot bind employees to the organization the resulting stable wage and profit profiles give rise to an objective function for the firm that places weight on inframarginal profits in an economically significant manner the authors in turn employ this methodology to explore applications of organizational design hiring and capital decisions training and cross training the importance of labor and asset specificity managerial hierarchies preferences for unionization responses to competition and internal capital budgeting copyright 1996 by american economic association

why sunk costs matter for bargaining outcomes an evolutionary approach abstract two bargaining parties play the nash demand game to share a pie whose size is determined by one party s investment decision various investment levels are subgame perfect adding the investment decision to young s evolutionary bargaining model yields the following long run outcome efficient investment prevails and the investor s share of the pie approximates die maximum of i the smallest share that induces efficient investment even if the investor expects to appropriate the available pie from every inefficient investment and ii half of the pie the result favors forward induction to subgame consistency and equity theory to hold ups journal of economic literature classification numbers c78 l14

broadening the market design approach to school choice school choice refers to policies that allow parents preferences to be an input to the decision of which school a student will attend a rich body of research has developed over the past 10 15 years to study mechanisms that implement school choice this literature has mostly taken the inputs of school choice preferences priorities and capacities as exogenous more recently researchers have sought to embed the school choice problem into its wider context thereby broadening the scope of market design questions and enriching the analysis this article discusses current school choice policy issues in light of this recent literature and outlines remaining open questions

the dynamics of health in the british household panel survey this paper considers the dynamics of a categorical indicator of self assessed health using eight waves 1991 1998 of the british household panel survey bhps our analysis has three focal points the relative contributions of state dependence and heterogeneity in explaining the dynamics of health the existence and consequences of health related sample attrition and the investigation of the effects of measures of socioeconomic status with a particular focus on educational attainment and income to investigate these issues we use dynamic panel ordered probit models there is clear evidence of health related attrition in the data but this does not distort the estimates of state dependence and of the socioeconomic gradient in health the models show strong positive state dependence and heterogeneity accounts for around 30 of the unexplained variation in health copyright 2004 john wiley sons ltd

investment incentives in bilateral trading abstract we characterize the surplus maximizing trading mechanism under two sided incomplete information and interim individual rationality when one party can make a value enhancing specific investment this mechanism exhibits a trade off between providing investment incentives and inducing voluntary participation we analyze how the trading area of the optimal mechanism is further distorted in order to provide investment incentives applications of our main results and the underlying geometric analysis to institutional design issues are also provided

learning matters reappraising object allocation rules when agents strategically investigate individuals form preferences through search interviews discussion and investigation in a stylized object allocation model we characterize the equilibrium learning strategies induced by different allocation rules and trace their welfare consequences our analysis reveals that top trading cycles rules dominate serial priority rules under inequality averse measures of social welfare

why do workers join unions the case of israel the author argues that because almost all israeli wage earners were covered by collective agreements in the early 1980s neither the collective voice hypothesis nor the earnings premium hypothesis the two prevailing explanations of workers decision to join unions was then applicable to israel using 1982 survey data on israeli workers he examines four alternative explanations of unionization in israel non work benefits political ideology social values especially workers attitude toward unions as a means for solidarity and work and demographic attributes such as employing unit size gender ethnicity education and age he finds that israeli workers decision to join the israeli federation of labor the histadrut can be explained in part by non work benefits of the histadrut health insurance and legal aid for example and by the workers social values

information and the hold up problem we examine situations in which a party must make a sunk investment prior to contracting with a second party to purchase an essential complementary input we study how the resulting hold up problem is affected by the seller s information about the investing party s likely returns from its investment our principal focus is on the effects of the investment s being observable by the non investing party contrary to popular intuition we find that an improvement in the seller s information e g the investment s being observable rather than not can benefit the buyer and harm the seller we also find that other popular intuitions about this problem are either false incomplete or require strong assumptions to be valid

varieties of entrepreneurship exploring the institutional foundations of different entrepreneurship types through varieties of capitalism arguments while entrepreneurship researchers agree that institutions matter for entrepreneurship they also have a rather encompassing understanding of institutions as almost any external factor that influences entrepreneurship ultimately this literature thus comes up with a long list of institutional factors that may explain entrepreneurial differences between countries but which institutions are most influential how do these institutions relate to different types of entrepreneurship and to what extent are institutions complementary to each other in the way they sustain different entrepreneurship types the literature on varieties of capitalism voc offers a parsimonious theoretical framework to address these questions based on the voc literature we theoretically derive a consistent set of institutional indicators that can explain differences in entrepreneurship types between countries based on principal component and cluster analyses we illustrate how 21 western developed economies cluster around four distinct institutional settings furthermore we use simple ols regressions to show how these institutional constellations are related to different types of entrepreneurship we conclude that four different varieties of entrepreneurship can be identified across the western world the main implication of our findings is that a perfect institutional constellation equally facilitating different types of entrepreneurship does not exist policy makers seeking to stimulate entrepreneurship are thus faced with the trade off of targeting policy reforms to that entrepreneurship type they intend to promote at the expense of other types of entrepreneurship and the broader societal consequences such reforms will have

delays and partial agreements in multi issue bargaining abstract we model a situation in which two players bargain over two pies one of which can only be consumed starting at a future date suppose the players value the pies asymmetrically one player values the existing pie more than the future one while the other player has the opposite valuation we show that players may consume only a fraction of the existing pie in the first period and then consume the remainder of it along with the second pie at the date at which the second pie becomes available thus our model features a special form of bargaining delay in which agreements take place in multiple stages such partial agreements arise when players are patient enough when they expect the second pie to become available soon and when the asymmetry in their valuations is large enough

state dependence serial correlation and heterogeneity in intertemporal labor force participation of married women a dynamic search framework is developed to analyze the intertemporal labor force participation behavior of married women using longitudinal data to allow for a rich dynamic structure the sensitivity to alternative distributional assumptions is evaluated using linear probability and probit models the dynamic probit models are estimated using maximum simulated likelihood msl estimation to overcome the computational difficulties inherent in maximum likelihood estimation of models with nontrivial error structures the results find that participation decisions are characterized by significant state dependence unobserved heterogeneity and negative serial correlation in the error component the hypothesis that fertility decisions are exogenous to women s participation decisions is rejected when dynamics are ignored however there is no evidence against this hypothesis in dynamic model specifications women s participation response is stronger to permanent than current nonlabor income reflecting unobserved taste factors

ex post renegotiation proof mechanism design we study what kind of equilibria of which mechanisms are ex post renegotiation proof eprp i e robust against the possibility of ex post renegotiation under a variety of renegotiation procedures and which social choice functions are eprp implementable in complete information environments with two agents only budget balanced groves allocations are eprp implementable while with three or more agents all ex post efficient allocations are in environments with independent private values essentially only the budget balanced groves in expectations allocations are eprp implementable while with three or more agents and correlated beliefs all ex post efficient allocations are

procurement and renegotiation parties bound by an incomplete contract have an incentive to renegotiate after acquiring new information the issue of the parties investment in the relationship before renegotiation is analyzed in a simple two period procurement model the firm invests in the first period it then learns its production cost and the sponsor learns its value for the project williamson s underinvestment presumption is shown to hold under very general assumptions about bargaining and about the ex post asymmetry of information as long as the firm s investment is not observable by the sponsor the introduction of a cancellation fee may well lead to even less investment contrary to what is sometimes argued the role of ex ante price fixing as an alternative way to reintroduce some form of commitment and the problem of cost overruns are discussed last it is shown that if investment is observable by the sponsor andthus may become a joint decision variable the two parties may choose to under or overinvest

an efficient dynamic mechanism this paper constructs an efficient budget balanced bayesian incentive compatible mechanism for a general dynamic environment with quasilinear payoffs in which agents observe private information and decisions are made over countably many periods first under the assumption of private values other agents private information does not directly affect an agent s payoffs we construct an efficient ex post incentive compatible mechanism which is not budget balanced second under the assumption of independent types the distribution of each agent s private information is not directly affected by other agents private information we show how the budget can be balanced without compromising agents incentives finally we show that the mechanism can be made self enforcing when agents are sufficiently patient and the induced stochastic process over types is an ergodic finite markov chain publication abstract

strategyproof assignment by hierarchical exchange we give a characterization of the set of group strategyproof pareto optimal and reallocation proof allocation rules for the assignment problem where individuals are assigned at most one indivisible object without any medium of exchange although there are no property rights in the model the rules satisfying the above criteria imitate a trading procedure with individual endowments in which individuals exchange objects from their hierarchically determined endowment sets in an iterative manner in particular these assignment rules generalize gale s top trading cycle procedure the classical rule for the model in which each individual owns an indivisible good

efficient investments in the implementation problem abstract this paper identifies a condition for an efficient social choice rule to be fully implementable when we take into account investment efficiency to do so we extend the standard implementation problem to include endogenous ex ante and ex post investments in our problem the social planner aims to achieve efficiency in every equilibrium of a dynamic game in which agents strategically make investments before and after playing the mechanism our main theorem shows that a novel condition commitment proofness is sufficient and necessary for an efficient social choice rule to be implementable in subgame perfect equilibria the availability of ex post investments is crucial in our model there is no social choice rule that is efficient and implementable in subgame perfect equilibria without ex post investments we also show that our positive result continues to hold in the incomplete information setting

fringe benefits and labor mobility interindustry factor mobility is a crucial determinant of the income distribution effects of exogenous changes in relative commodity prices this examination of interindustry variation in wages and profits using data from manufacturing industries from

contractual signaling relationship specific investment and exclusive agreements i analyze a model of hold up with asymmetric information at the contracting stage the asymmetry of information concerns the value of trade with external parties i show that contractual signaling and efficiency of investment can conflict if only quantity is contractible this conflict generates inefficient equilibria in terms of investment contracting on exclusivity in addition to quantity resolves the conflict and consequently eliminates the inefficiency of investment

complexity and renegotiation a foundation for incomplete contracts the paper considers a hold up model where only one of n future trading opportunities will prove to be efficient and where ex post renegotiation of the ex ante contract cannot be prevented as the environment becomes more complex n the outcome under any message contingent long term contract converges to that of the incomplete contracting model where trade is contractible ex post but not ex ante when trades are costly to describe both ex ante and ex post the incomplete contracting result is extended to a broader class of environments

the design of contracts and remedies for breach in the first part of this article hypothetical contracts providing for all possible uncertain contingencies are considered in the next part contracts providing for only some contingencies are examined and are shown to be advantageous due both to difficulties that could arise in making and enforcing contingent terms and to the presence of implicit substitutes for them in the following major part of the article two of these substitutes for contingent terms are analyzed remedies for breach and the opportunity for renegotiation the existence of both is demonstrated to induce parties to behave approximately as they would under detailed contracts

the impact of employer provided health insurance on dynamic employment transitions we estimate the impact of employer provided health insurance ephi on the job mobility of males over time using a dynamic empirical model that accounts for unobserved heterogeneity previous studies of job lock reach different conclusions about possible distortions in labor mobility stemming from an employment based health insurance system a few authors find no evidence of job lock although most find reductions in the mobility of insured workers of between 20 and 40 percent we use data from the national longitudinal survey of youth which includes variables describing the health insurance an individual holds as well as whether he is offered insurance by his employer this additional information allows us to model the latent individual characteristics that are correlated with the offer of ephi the acceptance of ephi and employment transitions our results provide an estimate of job lock unbiased through correlation with positive job characteristics and individual specific turnover propensity we find no evidence of job lock among married males and produce small estimates of job lock among unmarried males of between 10 and 15 percent

a mechanism design approach to the tiebout hypothesis we revisit the tiebout hypothesis in a world in which agents may learn extra information as to how they value the various local public goods once located and jurisdictions are free to commit to whatever mechanism to attract citizens it is shown in quasi linear environments that efficiency can be achieved as a competitive equilibrium when jurisdictions seek to maximize local revenues but not necessarily when they seek to maximize local welfare interpretations and limitations of the result are discussed

subgame perfect implementation this paper examines the use of stage mechanisms in implementation problems and provides a partial characterization of the set of subgam e perfect implementable choice rules it is shown that in many economic environments virtually an y choice rule can be implemented to illustrate the power of this approach the paper discusses a number of models in which it is possible to implement the first best although it wouldn t have been possible to do so without using stage mechanisms the diversity of these models suggests that subgame perfect implementation may find wide application copyright 1988 by the econometric society

employment based health insurance and job mobility is there evidence of job lock the majority of privately insured americans obtain their health insurance through their own or a family member s employment the rationale for employers to provide health insurance is straightforward by pooling the risks of individuals employers can reduce adverse selection and lower administrative expenses in addition they benefit from tax laws allowing businesses to deduct their health insurance costs these advantages of employer provision however must be weighed against the distortions they may generate in individual labor market decisions in particular health insurance may distort job mobility if employees decide to keep jobs they would rather leave for fear of losing coverage for preexisting conditions a possibility that has been termed job lock this paper attempts to quantify the effect of employer provided health insurance on the labor market mobility of individuals the link between employer provided health insurance and

limited contract enforcement and strategic renegotiation this paper presents a strategic theory of contract renegotiation in this theory suboptimal contracts are put in place initially to protect one party against undesirable a ctions by another party and are renegotiated once the danger is past the authors develop a model to establish the cases in which simple contracts cannot achieve desirable outcomes so that only a complicated contract or renegotiation will serve unlike most previous accounts of contract renegotiation this theory does not rely on exogenous uncertainty to motivate renegotiation copyright 1988 by american economic association

efficient reliance and damage measures for breach of contract this article considers a situation where the buyer or the seller of a good must engage in expenditures on specific capital before the exchange either to prepare to use the product or to prepare to sell it it is assumed that postbreach bargaining is possible and carried out in a cooperative fashion and that buyers and sellers form expectations about the outcome of such bargaining in a specific way without enforceable contracts the potential appropriability of specific rents results in inefficiently low levels of investment three damage measures commonly used to enforce contracts are shown to produce inefficiently high levels of investment and to be pareto ranked from best to worst as follows specific performance expectation damages and reliance damages

investments and bargaining in a model with positive consumption externalities abstract this paper analyzes the investment decisions of the members of a committee when a subsequent bargaining process determines the distribution of a divisible good among them the shares allocated to investing agents generate positive consumption externalities we show that agents investments improve their bargaining position this induces rent seeking behavior that generates a negative external effect on other investing agents in this setting the effects of rent seeking counterbalance the effects of positive consumption externalities so that equilibria may be efficient or display either over or under investment

efficient contracting with reliance and a damage measure this article reexamines the problem of breach of contract studied by shavell 1980 1984 and rogerson 1984 by considering explicitly the incentive problems that arise from asymmetric information and transaction specific investment we derive the optimal contract which consists of variable price and damage payment schedules each of which is set before any private information is observed we show that the optimal contract attains full classical efficiency

the rise in unemployment a multi country study one of the most remarkable features of recent economic history has been the remorseless rise in unemployment throughout the industrialized countries however while the trend to higher unemployment is universal the experience of individual countries also differs widely the increase is especially marked within the european community where unemployment rates rival those reached in the interwar years by contrast in the scandinavian countries and japan unemployment is lower and has risen very much less experience in the united states lies somewhere between these extremes and in the last few years unemployment there has fallen sharply

unobservable investment and the hold up problem we study a two person bargaining problem in which the buyer may invest and increase his valuation of the object before bargaining we show that if all offers are made by the seller and the time between offers is small then the buyer invests efficiently and the seller extracts all of the surplus hence bargaining with frequently repeated offers remedies the hold up problem even when the agent who makes the relation specific investment has no bargaining power and contracting is not possible we consider alternative formulations with uncertain gains from trade or two sided investment

renegotiation proof implementation and time preferences this paper explores how the requirement that the implementation of contracts be renegotiation proof affects the set of contracts that can be implemented in a seller buyer scenario in which the information regarding the agents valuations is nonverifiable this paper explicitly adds a time dimension to an implementa tion problem and introduces a natural criterion of renegotiation proofness for the case of time consuming renegotiation the main insight gained is that the addition of the time dimension enlarges significantly the set of contracts that can be implemented in a renegotiation proof manner jel c70 d23 this paper explores how the requirement that the implementation of contracts be renegotiation proof affects the set of con tracts that can be implemented in a seller buyer scenario in which the informa tion regarding the agents valuations is non verifiable the paper s main contributions are that first it explicitly adds a time di mension to an implementation problem and second it introduces a natural criterion of renegotiation proofness for the case of time consuming renegotiation for concreteness the discussion will be conducted in the context of the following example there are two agents a seller and a buyer who sign a contract for the sale of one unit in the future their valuations for the unit denoted by s and b respectively are not known when they sign the contract they become known to both parties after the contract is signed and before it is imple mented thus when it comes to implement ing the contract the parties information is complete but it is assumed to be nonverifi able i e not observable to third parties such as a court 1 when they sign the con tract the parties want to specify for any possible realization of the valuations s b whether or not there will be trade and the price p s b at which it will take place the contract describes the procedure that will be followed after the valuations are real ized the purpose of this procedure is to make sure that the original intentions of the parties are indeed carried out the idea is that the steps laid out in the contract are independent of s b and hence are en forceable by a third party or by a social convention in game theoretic terms a contract specifies a game form that imple ments the function p in the sense that for all s and b p s b is the resulting game s unique subgame perfect equilibrium out come in the context of this scenario we shall investigate the set of price functions p s b that can be so implemented by a contract and examine how this set is affected by the requirement that the contract be renegotia

two separated effects of employer provided health insurance on job mobility we estimate the effect of employer provided health insurance ephi on job mobility via a dynamic model of joint employment and health insurance decision in the presence of uncertainty about wage rate and health status transitions the model is based on a markov decision process in which a hedonic wage approach provides an economic rationale for the different choices and health insurance serves as an input to the health production process including health transitions in the model helps us to understand how the availability of ephi positive job characteristic and holding ephi the wage health insurance trade off enter into the individuals decisions the model is estimated using the 1999 2000 medical expenditure panel survey panel 4 and the results show that the pure effects of holding ephi are negligible the full effects of ephi are significant and the degrees of the inefficiency vary between 14 and 25 across different states

learning by doing and dynamic regulation from experience regulated monopolists learn to employ cost reducing innovations we characterize the optimal regulation of an innovating monopolist with unknown costs regulatory policy is designed to minimize current costs of service while encouraging development of cost saving innovations we find that under optimal regulation i innovation is encouraged by light handed regulation allowing the monopolist to earn greater information rents while providing greater service ii innovation occurs in the absence of long term agreements when private information is recurring and iii innovation is more rapid in a durable franchise and the regulator prefers durable franchises for exploiting learning economies

the right of first offer abstract this paper examines the right of first offer which requires a seller to bargain with the contracted buyer before subsequent buyers arrive the contract also prevents the seller from selling his unique asset to subsequent buyers at a price below what he offers to the contracted buyer the right of first offer makes the seller less aggressive in bargaining with the contracted buyer who is privately informed about his valuation such a contract can reduce inter temporal misallocation in which a subsequent buyer gets the asset when the contracted buyer has higher valuation but it also may cause misallocation in which the contracted buyer gets the asset when subsequent buyers have higher valuations overall whether the right of first offer can increase the joint surplus for the seller and the contracted buyer as well as social welfare depends on the contracted buyer s renegotiation power and the distribution of the buyers valuations this paper also discusses the differences between the right of first offer and the most favored customer clause

does centralized collective bargaining promote wage restraint the case of israel this study examines whether centralized collective bargaining promoted wage restraint in israel in the period 1968 84 wage determination in israel appears to be highly centralized and the author shows that wage increases under central settlements during the period studied were almost invariably consistent with the goal of preserving competitiveness except in periods when there was consensus among major interest groups that sacrifice was necessary however wage drift tended to render the central federation s exercise of restraint ineffective these results the author concludes support the view that consensus and not the structure of collective bargaining per se is the key to success in corporatist economies

political economy of dynamic resource wars abstract the political economy of exhaustible resource extraction is analysed in three contexts first if an incumbent faces a threat of being removed once and for all by a rival faction extraction becomes more voracious if the factions do not share rents equally second perennial political conflict cycles are more inefficient if constitutional cohesiveness or the partisan in office bias is large and political instability is high third resource wars are more intense if constitutional cohesiveness is weak the incumbent has a partisan in office bias reserves of resources are high the wage is low governments can be less frequently removed from office and fighting technology has less decreasing returns to scale resource depletion in such wars is more rapacious if there is more government instability the political system is less cohesive and the partisan in office bias is smaller

networks versus vertical integration we construct a theory to compare vertically integrated firms to networks of manufacturers and suppliers vertically integrated firms make their own specialized inputs in networks manufacturers procure specialized inputs from suppliers that in turn sell to several manufacturers the analysis shows that networks can yield greater social welfare when manufacturers experience large idiosyncratic demand shocks individual firms may also have the incentive to form networks despite the lack of long term contracts the analysis is supported by existing evidence and provides predictions as to the shape of different industries

an equilibrium model of health insurance provision and wage determination we investigate the effect of employer provided health insurance on job mobility rates and economic welfare using a search matching and bargaining framework in our model health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee the resulting equilibrium is one in which not all employment matches are covered by health insurance wages at jobs providing health insurance are larger in a stochastic sense than those at jobs without health insurance and workers at jobs with health insurance are less likely to leave those jobs even after conditioning on the wage rate we estimate the model using the 1996 panel of the survey of income and program participation and find that the employer provided health insurance system does not lead to any serious inefficiencies in mobility decisions

optimal information transmission in a holdup problem this article examines the optimal contract in a bilateral trade model with unobservable relationship specific investment and renegotiation in such a setting a contract plays an additional role that it does not have in the standard holdup model namely that of transmitting information between the parties the article shows that a partial disclosure contract may be optimal and describes the optimal contract if the investment is cooperative and the information between the trading parties is asymmetric the optimal contract generally cannot result in the first best but dispensing with either of these assumptions makes the first best achievable

incomplete contracts specific investments and risk sharing an optimal contract design problem is considered contracts which are incomplete and simple are used to investigate the extent to which constrained revisions can mitigate inefficiencies resulting from contractual incompleteness an optimal contract is characterized in two cases first when a contract is being used to facilitate trade between two risk neutral parties who must make relationship specific investments it is possible to implement the first best by a simple contract second when a contract is being used to share risk it is generally not possible to implement the first best when one party is risk neutral however it is possible to implement the first best by assigning all the ex post decision rights to that party

expectation damages divisible contracts and bilateral investment this paper examines the efficiency of expectation damages as a breach remedy in a bilateral trade setting with renegotiation and relationship specific investment by the buyer and the seller as demonstrated by edlin and reichelstein 1996 no contract that specifies only a fixed quantity and a fixed per unit price can induce efficient investment if marginal cost is constant and deterministic we show that this result does not extend to more general payoff functions if both parties face the risk of breaching the first best becomes attainable with a simple price quantity contract

strategic ex ante contracts rent extraction and opportunity costs this article cosiders the possibility that a seller can contract with one uninformed buyer prior to an auction involving two potential buyers the seller s optimal strategic ex ante contract more accurately reflects joint opportunity costs of the seller and the contracted buyer and therefore extracts more rent from the entrant moreover this ex ante contract mitigates the seller s ex post rent seeking vis a vis the contracted buyer accordingly it may create more social welfare than the absence of ex ante contracts depending upon the contracted buyer s financial constraint and the distributions of trade surplus implementation of the optimal strategic ex ante contract and policy implications are discussed

uncertainty asymmetric information and bilateral contracts on considere un monopole bilateral avec incertitude et information asymetrique on donne les conditions necessaires et suffisantes a l existence de contrats qui soient efficaces et a la fois stimulants

incentive compatibility in a market with indivisible goods abstract in a market in which each trader s initial endowment is one unit of an indivisible good there exists an incentive compatible procedure for reaching a competitive allocation this contrasts with some recent results for similar problems

incomplete contracting and price regulation abstract this paper deals with price regulation of a monopolistic distribution grid which sells a license to some retailer the regulator aims at attaining efficient sale of the license and efficient relationship specific investments of the agents the first best can be attained by a sequential regulatory mechanism which gives the seller an option to grant the license but allows the buyer to make counteroffers this sequential mechanism runs counter to the usual price cap idea since possible upward but never downward renegotiation of the regulated prices is the vehicle to attain the first best