JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.When an antidumping policy involves the imposition of duties, the threat of antidumping enforcement may alter strategic behavior under imperfect competition. This point is illustrated in a model where the foreign firm is a monopolist in its local market, but competes with a domestic firm in the home country's market. The welfare effects of an antidumping policy are examined under quantity-setting and price-setting behavior with either perfect or imperfect substitutes. Imposing an antidumping policy frequently improves domestic welfare'under quantity-setting behavior, and typically worsens it under price-setting behavior. Surprisingly, foreign welfare may improve.

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We analyze the price-formation process in an infinite-horizon oligopoly model where hydroelectric generators engage in dynamic price-based competition. The analysis focuses on the role of “indifference” prices, i.e., prices that equate the gains from releasing or storing water. Strategies where players bid their indifference prices and the marginal player undercuts the lowest-cost unsuccessful bidder constitute a Markov Perfect Equilibrium (MPE) under appropriate conditions. These conditions involve symmetric production capacity and nonfractional (i.e., “all or nothing”) output by successful bidders. Although the MPE solution represents an equilibrium consistent with dynamic strategic behavior, it requires computational sophistication by market participants. However, a basic “learning” procedure involving indifference prices converges to an MPE.

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Bureau of EtOOOmiC5 workiog papers are preliminary materials circulated to stimulate discussion and critical comment. All data cootained in them are in the public domain. This includes information obtained by the Commissioo whicb bas become part of pubUc record. Tbe analyS(!S and conclnsions set forth are tbose or the autbors and do not necessarily reflect the views of other members of the Bureau of Etonomics, other Commissioo staff, or the Commission itself. Upon request, siogle copies of the paper will be provided. References in publications to FiC Bureau of EtOOOmiC5 workiog papers by FiC economists (other than admowledgemeot by a writer tbat he bas access to sucb ODpublisbed materials) should be cleared with the author to protect the tentative character of these papers.

In this paper we revisit incentive contract design in a simple setting, after developing a model that captures the fact that in weak institutional settings the procurement of large scale public works through contracts with strong incentives for private firms, may result in excessive litigation over contract terms. This result is possible because we assume that parties in litigation can influence (by purchasing better or more legal services) the observable merits of their case. In weak institutional settings, governments have an inherent disadvantage in these litigation contests. We show that a commitment to a prespecified level of litigation effort by the government, together with weaker incentive contracts, is a more efficient procurement mechanism. Copyright Springer Science+Business Media, Inc. 2005incentive contracts, infrastructure provision, litigation, asymmetric information,

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