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Contents Abstract Keywords 1. Introduction 2. ACE study of economic systems 3. From Walrasian equilibrium to ACE trading 3.1 Walrasian bliss in a hash-and-beans economy 3.2 Plucking out the Walrasian Auctioneer 3.3 The ACE Trading World: Outline 3.4 Defining " equilibrium " for the ACE Trading World 4. ACE modeling of procurement processes 4.1 Constructive(More)
We prove existence of equilibrium in a continuous-time securities market in which the securities are potentially dynamically complete: the number of securities is at least one more than the number of independent sources of uncertainty. We prove that dynamic completeness of the candidate equilibrium price process follows from mild exogenous assumptions on(More)
We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an “oblivious equilibrium,” in which each firm is assumed to make decisions based only on its own state and knowledge of the long run average industry state, but where firms ignore current(More)
I develop a model of an R&D race with knowledge accumulation. My model does not inherit the memorylessness property of the exponential distribution that troubles existing models of R&D races. Hence, firms’ knowledge stocks are no longer irrelevant to their behavior during the R&D race, and knowledge accumulation has strategic implications. In this more(More)
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Several papers on international business cycles have documented spurious welfare reversals, in that incomplete market economies can produce higher welfare than the complete market economy. This paper demonstrates how conventional linearization, as used in King, Plosser, and Rebelo (1988), can generate approximation errors that are large enough to result in(More)
Can advertising lead to a sustainable competitive advantage? To answer this question, we propose a dynamic model of advertising competition where firms repeatedly advertise, compete in the product market, and make entry as well as exit decisions. Within this dynamic framework, we study two different models of advertising: in the first model, advertising(More)
This paper shows that under typical conditions the simple “excess-burden triangle” formula substantially underestimates the excess burden of commodity taxes. This formula performs poorly because it ignores general equilibrium interactions – most importantly, interactions between the market for the taxed commodity and the labor market. Using analytically(More)
Research on the implications of learning-by-doing has typically been restricted to specifications of the agent's decision problem for which estimation and control can be treated separately. Recent work has provided the limit properties of beliefs and actions for learning problems under more general conditions, for which experimentation is an important(More)