This paper investigates the large and unexpected increase in cigarette prices that followed the 1997 Master Settlement Agreement (MSA). We integrate key features of rational addiction theory into a discrete-choice model of the demand for a differentiated product. We find that following the MSA firms set prices on a more elastic region of their demand curves. Using these estimates, we predict prices that would be charged under a variety of industry structures and pricing rules. Under the assumptions of firms perfect foresight and constant marginal costs, we fail to reject the hypothesis that firms collude on a dynamic pricing strategy.
Contents
- Frontiers Article
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Requires Authentication UnlicensedPublic Policy and Market Competition: How the Master Settlement Agreement Changed the Cigarette IndustryLicensedJuly 18, 2010
- Advances Article
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Requires Authentication UnlicensedTax Law Asymmetries and Income Shifting: Evidence from Japanese Capital KeiretsuLicensedJanuary 22, 2010
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Requires Authentication UnlicensedTax and Subsidy Combinations for the Control of Car PollutionLicensedFebruary 9, 2010
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Requires Authentication UnlicensedSelective Schools and Academic AchievementLicensedFebruary 12, 2010
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Requires Authentication UnlicensedSimple Pricing Schemes for Pollution Control under Asymmetric InformationLicensedFebruary 23, 2010
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Requires Authentication UnlicensedTelling the Truth May Not Pay Off: An Empirical Study of Centralized University Admissions in GermanyLicensedMarch 22, 2010
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Requires Authentication UnlicensedPermit Markets, Seller Cartels and the Impact of Strategic BuyersLicensedApril 6, 2010
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Requires Authentication UnlicensedTransactions Costs in Charitable Giving: Evidence from Two Field ExperimentsLicensedApril 6, 2010
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Requires Authentication UnlicensedLearning-by-Doing and Cannibalization Effects at Multi-Vintage Firms: Evidence from the Semiconductor IndustryLicensedMay 5, 2010
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Requires Authentication UnlicensedThe Role of Television in Household Debt: Evidence from the 1950'sLicensedMay 7, 2010
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Requires Authentication UnlicensedHigh-Powered Careers and Marriage: Can Women Have It All?LicensedMay 7, 2010
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Requires Authentication UnlicensedThe Effect of Financial Development on the Investment-Cash Flow Relationship: Cross-Country Evidence from EuropeLicensedMay 21, 2010
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Requires Authentication UnlicensedWho Benefits from the Earned Income Tax Credit? Incidence among Recipients, Coworkers and FirmsLicensedMay 21, 2010
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Requires Authentication UnlicensedAdvertising Competition in Retail MarketsLicensedAugust 3, 2010
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Requires Authentication UnlicensedAdvertising Collusion in Retail MarketsLicensedAugust 3, 2010
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Requires Authentication UnlicensedUncertainty, the Demand for Health Care, and Precautionary SavingLicensedAugust 23, 2010
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Requires Authentication UnlicensedHousehold Demand for Broadband Internet in 2010LicensedSeptember 9, 2010
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Requires Authentication UnlicensedChapter 7 or 13: Are Client or Lawyer Interests Paramount?LicensedSeptember 13, 2010
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Requires Authentication UnlicensedHeterogeneity and Learning in Labor MarketsLicensedSeptember 17, 2010
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Requires Authentication UnlicensedProtecting Minorities in Large Binary Elections: A Test of Storable Votes Using Field DataLicensedOctober 20, 2010
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Requires Authentication UnlicensedPet Overpopulation: An Economic AnalysisLicensedDecember 9, 2010
- Contributions Article
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Requires Authentication UnlicensedIQ and Family Background: Are Associations Strong or Weak?LicensedJanuary 19, 2010
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Requires Authentication UnlicensedThe Duration of Paid Parental Leave and Children's Scholastic PerformanceLicensedJanuary 22, 2010
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Requires Authentication UnlicensedCauses of Caregiver Turnover and the Potential Effectiveness of Wage Subsidies for Solving the Long-Term Care Workforce 'Crisis'LicensedJanuary 27, 2010
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Requires Authentication UnlicensedLeaves and Leaving: The Family and Medical Leave Act and the Decline in Maternal Labor Force ParticipationLicensedJanuary 27, 2010
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Requires Authentication UnlicensedMexican-American EntrepreneurshipLicensedFebruary 16, 2010
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Requires Authentication UnlicensedRisks and Prices: The Role of User Sanctions in Marijuana MarketsLicensedFebruary 17, 2010
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Requires Authentication UnlicensedTechnology Uncertainty and Market CollusionLicensedMarch 2, 2010
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Requires Authentication UnlicensedMinimum Resale Price Maintenance: Some Empirical Evidence from MarylandLicensedMarch 12, 2010
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Requires Authentication UnlicensedSocial Security and DemocracyLicensedMarch 12, 2010
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Requires Authentication UnlicensedThe Impact of Inspections on Plant-Level Air EmissionsLicensedMarch 16, 2010
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Requires Authentication UnlicensedLong-Run Earnings Inequality and Earnings Instability among Canadian Men Revisited, 1985-2005LicensedMarch 17, 2010
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Requires Authentication UnlicensedWIC Eligibility and Participation: The Roles of Changing Policies, Economic Conditions, and DemographicsLicensedMarch 17, 2010
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Requires Authentication UnlicensedImmigration, Citizenship, and the Size of GovernmentLicensedMarch 31, 2010
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Requires Authentication UnlicensedThe Impact of Job Stress on Smoking and Quitting: Evidence from the HRSLicensedMarch 31, 2010
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Requires Authentication UnlicensedSubsidies for the Production of Cleaner Energy: When Do They Cause Emissions to Rise?LicensedApril 1, 2010
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Requires Authentication UnlicensedIntergenerational Income Mobility in a Less-Developed, High-Inequality Context: The Case of ChileLicensedApril 9, 2010
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Requires Authentication UnlicensedAre You Paying Your Employees to Cheat? An Experimental InvestigationLicensedApril 19, 2010
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Requires Authentication UnlicensedAccidents, Liability Obligations and Monopolized Markets for Spare PartsLicensedMay 3, 2010
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Requires Authentication UnlicensedCredit Union Membership and Use of Internet Banking TechnologyLicensedMay 5, 2010
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Requires Authentication UnlicensedLock-In and the Transition to Hydrogen Cars: Should Governments Intervene?LicensedMay 6, 2010
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Requires Authentication UnlicensedAnonymity, Social Image, and the Competition for Volunteers: A Case Study of the Online Market for ReviewsLicensedMay 21, 2010
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Requires Authentication UnlicensedFamily Job Search, Wage Bargaining, and Optimal Unemployment InsuranceLicensedMay 27, 2010
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Requires Authentication UnlicensedThe Source and Significance of Confusion in Public Goods ExperimentsLicensedJuly 2, 2010
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Requires Authentication UnlicensedCan Venture Capital Be a Curse?LicensedJuly 2, 2010
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Requires Authentication UnlicensedWar Mobilization and the Great CompressionLicensedJuly 15, 2010
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Requires Authentication UnlicensedAffirmative Action at Nearby Colleges: Temporal and Regional ChangesLicensedJuly 22, 2010
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Requires Authentication UnlicensedRacing for Investment under Mandatory AccessLicensedJuly 25, 2010
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Requires Authentication UnlicensedThe Value of Information in RegulationLicensedAugust 23, 2010
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Requires Authentication UnlicensedMonopoly Pricing under a Medicaid-Style Most-Favored-Customer Clause and Its Welfare ImplicationLicensedAugust 28, 2010
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Requires Authentication UnlicensedU.S. Cigarette Demand: 1944-2004LicensedAugust 31, 2010
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Requires Authentication UnlicensedEconomic Incentives for a Healthy Diet: A Comparison of Policies in a Canadian ContextLicensedSeptember 15, 2010
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Requires Authentication UnlicensedThe Emergence of InstitutionsLicensedSeptember 16, 2010
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Requires Authentication UnlicensedTV Channels, Self-Control and HappinessLicensedSeptember 20, 2010
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Requires Authentication UnlicensedCommodity Taxation under Habit Formation and MyopiaLicensedSeptember 21, 2010
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Requires Authentication UnlicensedVoter Turnout, Information Acquisition and Education: Evidence from 15 European CountriesLicensedSeptember 22, 2010
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Requires Authentication UnlicensedI Scratched Yours: The Prevalence of Reciprocation in Feedback Provision on eBayLicensedSeptember 28, 2010
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Requires Authentication UnlicensedThe Welfare Impact of Collusion under Various Industry Characteristics: A Panel Examination of Efficient Cartel TheoryLicensedOctober 20, 2010
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Requires Authentication UnlicensedWhat More Than Parental Income, Education and Occupation? An Exploration of What Swedish Siblings Get from Their ParentsLicensedNovember 8, 2010
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Requires Authentication UnlicensedThe Impact of Climate Change Information: New Evidence from the Stock MarketLicensedNovember 17, 2010
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Requires Authentication UnlicensedCustoms Unions and Special ProtectionLicensedDecember 20, 2010
- Topics Article
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Requires Authentication UnlicensedWhat Kind of Job is Safer? A Note on Occupational VulnerabilityLicensedJanuary 19, 2010
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Requires Authentication UnlicensedLegalization and Immigrants in U.S. AgricultureLicensedFebruary 3, 2010
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Requires Authentication UnlicensedIdentities in the Commons: The Dynamics of Norms and Social CapitalLicensedFebruary 26, 2010
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Requires Authentication UnlicensedTraffic Congestion and Accident Externality: A Japan-U.S. ComparisonLicensedFebruary 26, 2010
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Requires Authentication UnlicensedDiversification in the Financial Services Industry: The Effect of the Financial Modernization ActLicensedMarch 8, 2010
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Requires Authentication UnlicensedSignaling and Indeterminacy of Equilibria in Unsecured Credit and Insurance MarketsLicensedMarch 24, 2010
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Requires Authentication UnlicensedMigration as Trade Facilitation: Assessing the Links between International Trade and MigrationLicensedMarch 29, 2010
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Requires Authentication UnlicensedThe Value of Layoffs and Labor Market Conditions as Signals of Worker QualityLicensedMarch 29, 2010
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Requires Authentication UnlicensedA Cournot Experiment with Managers and Students: Evidence from Germany and MalaysiaLicensedApril 6, 2010
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Requires Authentication UnlicensedCarbon Taxes and Innovation without CommitmentLicensedApril 7, 2010
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Requires Authentication UnlicensedFactors Influencing Governors' Salaries, 1961-2001LicensedApril 13, 2010
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Requires Authentication UnlicensedThe Value of Land Use Patterns and Preservation PoliciesLicensedMay 5, 2010
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Requires Authentication UnlicensedAsymmetric Complementary Goods Pricing under Sequential MovesLicensedMay 26, 2010
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Requires Authentication UnlicensedThe Effect of an Old-Age Demogrant on the Labor Supply and Time Use of the Elderly and Non-Elderly in MexicoLicensedJune 3, 2010
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Requires Authentication UnlicensedHow Import Competition Affects Displaced Workers in the U.S.LicensedJune 14, 2010
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Requires Authentication UnlicensedDo Labor Market Imperfections Increase Trade Protection? A Theoretical InvestigationLicensedJune 14, 2010
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Requires Authentication UnlicensedHow Should Standards Be Set and Met?: On the Allocation of Regulatory Power in a Federal SystemLicensedJune 14, 2010
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Requires Authentication UnlicensedEnvironmental Regulation and Industry DynamicsLicensedJune 23, 2010
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Requires Authentication UnlicensedTrade Liberalization, Standards and ProtectionLicensedJuly 7, 2010
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Requires Authentication UnlicensedThe Effects of Rent Seeking over Tradable Pollution PermitsLicensedJuly 7, 2010
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Requires Authentication UnlicensedTrade Protection and Industrial StructureLicensedJuly 7, 2010
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Requires Authentication UnlicensedStrategic Use of Debt in Flemish MunicipalitiesLicensedJuly 7, 2010
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Requires Authentication UnlicensedStructural Reforms and Budget Deficits in a Monetary Union: A Strategic ApproachLicensedJuly 8, 2010
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Requires Authentication UnlicensedThis Time Is Different: An Example of a Giant, Wildly Speculative, and Successful Investment ManiaLicensedJuly 9, 2010
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Requires Authentication UnlicensedIncentive Effect of Piece-Rate Contracts: Evidence from Two Small Field ExperimentsLicensedJuly 12, 2010
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Requires Authentication UnlicensedThe Economics of Female Genital CuttingLicensedJuly 18, 2010
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Requires Authentication UnlicensedR&D-Hindering CollusionLicensedJuly 23, 2010
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Requires Authentication UnlicensedSplit Decisions in Antidumping CasesLicensedJuly 29, 2010
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Requires Authentication UnlicensedFDI and Domestic Investment: An Industry-Level ViewLicensedJuly 30, 2010
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Requires Authentication UnlicensedAre Net FDI Flows and Reversals of Capital Flows a Result of Output Growth?LicensedAugust 3, 2010
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Requires Authentication UnlicensedThe Effect of Sunday Sales of Alcohol on Highway Crash FatalitiesLicensedAugust 10, 2010
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Requires Authentication UnlicensedNorth American Integration and Canadian Foreign Direct InvestmentLicensedAugust 12, 2010
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Requires Authentication UnlicensedEstimating HIV Prevalence and Incidence in Africa from Mortality DataLicensedSeptember 9, 2010
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Requires Authentication UnlicensedWhen Small Firms Fight Back Against Large Firms in R&D ActivitiesLicensedSeptember 9, 2010
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Requires Authentication UnlicensedDo Financial Shocks Have Negative Effects on Small Businesses? New Evidence from Japan for the Late 1990sLicensedSeptember 21, 2010
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Requires Authentication UnlicensedSupply Shocks and Gender Bias in Child Health Investments: Evidence from the ICDS Programme in IndiaLicensedSeptember 21, 2010
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Requires Authentication UnlicensedThe Effect of Competition on Physical Activity: A Randomized TrialLicensedSeptember 22, 2010
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Requires Authentication UnlicensedAn Experimental Analysis of the Demand for Payday LoansLicensedOctober 2, 2010
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Requires Authentication UnlicensedIndia's Increasing Skill Premium: Role of Demand and SupplyLicensedOctober 2, 2010
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Requires Authentication UnlicensedThe Welfare Implications of Rent Control: A Rent-Seeking Contest ApproachLicensedOctober 7, 2010
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Requires Authentication UnlicensedOther-Regarding Behavior and Taxpayer Preferences for Farm PolicyLicensedOctober 12, 2010
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Requires Authentication UnlicensedPrice and Quantity Policies in a Simple Political Economy FrameworkLicensedOctober 27, 2010
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Requires Authentication UnlicensedDriving Under the Influence of Our FathersLicensedNovember 1, 2010
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Requires Authentication UnlicensedWhy Does Intermarriage Increase Immigrant Employment? The Role of NetworksLicensedNovember 4, 2010
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Requires Authentication UnlicensedDeferments and the Relative Cost of ConscriptionLicensedNovember 11, 2010
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Requires Authentication UnlicensedMaintenance Costs, Outside Options and Optimal Ownership of a Public GoodLicensedNovember 11, 2010
Issues in this Volume
Issues in this Volume