Leo Simon

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If a regulator is unable to measure firms' individual emissions, an ambient tax can be used to achieve the socially desired level of pollution. With this tax, each firm pays a unit tax on aggregate emissions. In order for the tax to be effective, firms must recognize that their decisions affect aggregate emissions. When firms behave strategically with(More)
1 This paper offers a new approach to the study of economic problems usually modeled as games of incomplete information with discontinuous payoffs. Typically, the discontinuities arise from indeterminacies (ties) in the underlying problem. The point of view taken here is that the tie-breaking rules that resolve these indeterminacies should be viewed as part(More)
To what extent will an industry in which mergers are feasible tend towards monopoly? We analyze this question using a dynamic dominant firm model with rational agents, endogenous mergers and constant returns to scale production. We find that long-run industry concentration depends upon the initial concentration. A monopolistic industry will remain(More)
I compare the relative importance of intergenerational altruism and con-temporaneous cooperation, in determining equilibrium climate policy, by imbedding an OLG framework with intergenerational altruism into a differential game between nations. The model uses new representations for the aggregate preferences of OLGs with paternalistic or pure altruism, and(More)
In a principal-agent relationship, inputs that could be chosen by either party are often controlled by the principal. In the presence of adverse selection, the principal's profits are always higher when she controls an input than when she does not. Output is higher when she controls the input, since the second-best input specification reduces information(More)
The authors acknowledge the Office of the United States Trade Representative for partial sponsorship of this research, and Richard Cornes, Joseph Farrell and Devon Garvie for helpful suggestions. We are also grateful for the comments of three anonymous referees which have greatly improved the paper. We have also benefited from the comments of seminar(More)
Because carbon emissions create externalities across countries and generations , climate policy requires international cooperation and intergenerational altruism. A differential game using overlapping generations with intergener-ational altruism shows how altruism and cooperation interact, and provides estimates of their relative importance in determining(More)