This paper presents an answer, not found in the literature, to Rothschild's criticism that search models are unsatisfactory until they provide an explanation of price dispersion. The search models of Stiler and McCall are closed by explaining the firm's optimal decision-making problem. Then the existence of an equilibrium distribution of prices is established for both models. The analysis shows that price dispersion is supported and explained by a dispersion of production costs. The Stigler model shows that the variance of the price distribution increases while the McCall model shows that the variance eventually decreases with the intensity of search.

This paper establishes the existence of an equilibrium wage distribution for a labor market in which job seekers search sequentially. The search model shows why some workers will drop out of the market. Previous analysis of policies designed to reduce the number of dropouts was partial because wage distributions were exogenously given. Through the use of the equilibrium wage distribution implied by each policy, the analysis here shows that subsidizing search or imposing a minimum wage will reduce the number of dropouts, while a job training program or a reduction in unemployment compensation may either increase or decrease the number of dropouts. I In his article, "Economics of Information and Job Search " [1970], John McCall proposed a sequential search process that job seekers could use to screen the market for information. McCall's model pro-vided an intuitive explanation of why some workers decide to drop out of the labor market and several policies designed to reverse the dropout decision. However, the policy implications of the model have

The corporation is often viewed as a nexus of contracts. That view is slightly altered here. The corporation is viewed as a nexus of risks. The management of the corporation may then be thought of as the selection and management of the risks in a way that creates value. This I perspective is applied in a discussion of the three articles presented in this session.

This paper models a competitive financial market economy in which there are forward markets as well as stock and bond markets. Although there are separation theorems in the stock and forward markets literatures, this analysis shows that neither separation theorem survives in this integrated financial market economy. Next, the analysis shows that the separation results hold and are equivalent if the manager has an appropriate compensation package. Then the model is modified to allow for depreciation charges and tax credits. A positive theory of hedging is developed that shows that the corporation can preserve deductions and credits by hedging and so increase corporate value.

This paper presents an answer, not found in the literature, to Rothschild's criticism that search models are unsatisfactory until they provide an explanation of price dispersion. The search models of Stiler and McCall are closed by explaining the firm's optimal decision-making problem. Then the existence of an equilibrium distribution of prices is established for both models. The analysis shows that price dispersion is supported and explained by a dispersion of production costs. The Stigler model shows that the variance of the price distribution increases while the McCall model shows that the variance eventually decreases with the intensity of search.