Andrei Shleifer Research Articles

Informational Externalities and Welfare-Reducing Speculation

Introducing more speculators into the market for a given commodity leads to improved risk sharing but can also change the informational content of prices. This inflicts an externality on those traders already in the market, whose ability to make inferences based on current prices will be aff ected. In some cases, the externality is negative: the entry of new s peculators lowers the informativeness of the price to existing trader s. The net result can be one of price destabilization and welfare red uction. This is true even when all agents are rational, risk-averse c ompetitors who make the best possible use of their available informat ion. Copyright 1987 by University of Chicago Press.

Strict Liability: A Comment

WITHIN the last year there have appeared several major articles' that, while otherwise extremely diverse, share a strong preference (in one case implicit) for using the principle of "strict liability" to resolve legal conflicts over resource use.2 I shall argue in this comment that the authors of these articles fail to make a convincing case for strict liability, primarily because they do not analyze the economic consequences of the principle correctly.

The Economics of Fair Employment Laws

The Economics of Fair Employment Laws

Report of the Secretary

First Page