In the model of monopolistic competition on the circle, a product is identified by a single locational characteristic representing its brand or variety. The ability of a variety to compete with other varieties a given distance away (its specialization as quantified by transportation losses) is exogenously given in the standard model. Here, specialization is a choice variable selected by the firm. An equilibrium is derived, where the degree of specialization is endogenously determined. The effect of endogenizing specialization makes the Hotelling-Lancaster-Chamberlin model of monopolistic competition isomorphic to the Dixit-Stiglitz-Ethier formulation, without sacrificing the appealing concept of product 'distance.'

In this paper, the authors argue that modeling the trend component in real GNP as a random walk is inconsistent with its interpretation as productivity growth. As an alternative, they specify the trend as an ARIMA whose impulse response function follows an S-shaped pattern reflecting the process of diffusion of technical change. Such an ARIMA is employed to build and estimate an UCARIMA using U.S. postwar quarterly data. The authors find that their model, although more parsimonious, fits the data equally as well as the standard random walk plus AR(2) cycle. Moreover, their model has a very low cycle/trend variance ratio.

In a signal-extraction model of consumer behaviour, higher prices signal higher-quality products for a new product monopoly, even without cost asymmetries across different qualities. Moreover, higher-quality products earn greater expected profits, and the monopolist has an incentive to provide even transient improvements in quality. Finally, the monopolist has a positive incentive to conduct market research about quality, and produces more information than is socially optimal.

In dynamic models of unemployment in which the employed consume more than the unemployed, workers are finitely lived, and jobs are lasting, employment transfers consumption from future generations to those currently alive, resulting in a social surplus. That is, these transfers allow the current generation to consume more than its share of the output produced during its lifetime, without the increased consumption coming at the expense of future generations. Moreover, due to these intergenerational transfers, the allocation that maximizes steady-state output is Pareto dominated by another feasible allocation with a higher level of steady-state employment.

In this paper, we analyse the existence and uniqueness of equilibrium in a particular class of monopolistic rational expectations models. We show the equivalence between the Kyle (1985) model of insider trading where the insider observes the amount of noise trading and the Kyle (1989) model of informed speculation when there is one risk-neutral insider and many risk-neutral market makers. We show that in these two equivalent models: (i) There exists a unique equilibrium independently of the distribution of uncertainty; (ii) This equilibrium minimizes the expected gains of the informed agent under incentive compatibility constraints. We extend our results to a class of signalling games.