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Competing Premarital Investment

  • Michael Peters
  • Aloysius Siow

This paper studies pre-marital parental investments in their chil- dren's wealth where spousal wealth is a public good in marriage. By investing in their children's wealth, parents increase the wealth of their children and the quality of the spouses that their children can marry. In large marriage markets, the hedonic return to investment internal- izes all the external benefits of pre-marital investment in wealth so that the competitive equilibrium is efficient. Marriage market compe- tition also increases investments in small marriage markets relative to no competition, but equilibrium investments are not efficient.

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File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-PETERS-01-02.pdf
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number peters-01-02.

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Length: 21 pages
Date of creation: 21 Mar 2001
Date of revision:
Handle: RePEc:tor:tecipa:peters-01-02
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  1. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 445-64, July.
  2. Kevin Roberts & Leonardo Felli, 2000. "Does Competition Solve the Hold-up Problem?," Economics Series Working Papers 2000-W11, University of Oxford, Department of Economics.
  3. Michael Peters, 1998. "Limits of Exact Equilibria for Capacity Constrained Sellers with costlySearch," Working Papers peters-98-01, University of Toronto, Department of Economics.
  4. Lones Smith, 2006. "The Marriage Model with Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1124-1146, December.
  5. Harold L. Cole & George J. Mailath & Andrew Postlewaite, 1998. "Efficient non-contractible investments," Staff Report 253, Federal Reserve Bank of Minneapolis.
  6. Aloysius Siow & Xiaodong Zhu, 1998. "Differential Fecundity and Gender Biased Parental Investment," Working Papers siow-99-03, University of Toronto, Department of Economics.
  7. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  8. Maristella Botticini & Aloysius Siow, 2000. "Why Dowries?," Econometric Society World Congress 2000 Contributed Papers 0200, Econometric Society.
  9. Harold L. Cole & George J. Mailath & Andrew Postlewaite, 2000. "Efficient Non-Contractible Investments in Large Economies," CARESS Working Papres eff-inv-large, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  10. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
  11. Moen, E.R., 1995. "Competitive Search Equilibrium," Memorandum 37/1995, Oslo University, Department of Economics.
  12. Konrad, Kai A. & Lommerud, Kjell Erik, 1996. "The Bargaining Family Revisited," CEPR Discussion Papers 1312, C.E.P.R. Discussion Papers.
  13. Philip J. Reny, 1999. "On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games," Econometrica, Econometric Society, vol. 67(5), pages 1029-1056, September.
  14. Kahn, Shulamit & Lang, Kevin, 1988. "Efficient Estimation of Structural Hedonic Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 157-66, February.
  15. Allen, Beth & Hellwig, Martin, 1986. "Bertrand-Edgeworth Oligopoly in Large Markets," Review of Economic Studies, Wiley Blackwell, vol. 53(2), pages 175-204, April.
  16. MacLeod, W Bentley & Malcomson, James M, 1993. "Investments, Holdup, and the Form of Market Contracts," American Economic Review, American Economic Association, vol. 83(4), pages 811-37, September.
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