This paper examines the role of industry capacity in enforcing collusion in the context of repeated games. For a fixed capacity per firm it is shown that changes in the number of firms have a non-monotone effect on the best enforceable cartel price. This is due to the fact that while an additional firm lowers the share that each of the other firms enjoys at the collusive price it also increases the losses to each firm should the cartel fail.

This paper considers the problem of finding the “best” estimator among a class that includes most of the commonly used limited information estimators in simultaneous equation systems. Concentration comparisons, based on the Edgeworth expansion of the distribution of these estimators, lead to selection rules of sufficient simplicity to be useful in applied econometric research.

This paper examines the conditions for which it is optimal to permanently preserve natural environments in which a productive natural resource is found. The conditions are more restrictive than those previously indicated in the literature on the economics of natural environments. Increasing consumption and declining commodity prices are not sufficient to warrant permanent preservation. The initial capital stock can be an important determinant of the optimal level of preservation. In addition, resource amenity values will increase the initial resource price and decrease the rate of growth of the resource price.

Income mobility and horizontal inequity are two common examples of the phenomenon of “distributional change”: the transformation of an “old” distribution vector into a “new” distribution vector. An attempt is made to supplement the sundry ad hoc methods of measuring this change with a system of axioms that might command support as general principles of measurement. Variants on the axiom system are examined and the associated class of measures is derived.

This paper considers the effects of wage taxes, employment subsidies and unemployment benefits in a simple model of equilibrium search. Unemployment is determined by the equality of job matchings and job separations, job vacancies are determined by a zero-profit condition and wages by a Nash bargain between the meeting firm and worker. I show that marginal wage taxes influence the firm's and worker's equilibrium sharing rule, whereas employment subsidies and unemployment benefits influence only the surplus shared. Hence, tax-financed subsidies reduce wages and raise employment and vacancies, whereas tax-financed unemployment benefits raise wages and reduce employment and vacancies.

This paper develops a model in which a firm writes labour contracts with workers and debt contracts with creditors. Firms have more information than do the owners of the factors of production and they are also subject to limited liability. We show that if the limited liability constraint is binding then the employment level is inefficient relative to a situation of symmetric information. The firm is then embedded into a partial equilibrium model in which the real rate of interest is exogenously determined. We show that increases in the real rate of interest increase the inefficiency of the optimal employment contract and lead to layoffs in more states of nature than would occur at lower real interest rates. 1.