John Vickers

<jats:p>The great divide between official analyses and economists’ views of optimal bank equity capital is not as wide as appears at first sight if the economics of risk is properly addressed. Adapting the BoE’s analysis to take account of abnormal risk conditions, a less benign view of the effectiveness of resolution regimes in systemic crisis, an international rather than domestic perspective, and a consistent approach to risk, takes one a good distance towards the economists’ view. The economic rationale for capital levels in the region of Basel III is left looking thin. It looks thinner still when, as now, price-to-book ratios are calling regulatory capital measures into question for some important banks</jats:p>

Mark Armstrong, John Vickers We analyze a market where some consumers only consider buying from a specific seller while other consumers choose the best deal from several sellers. When sellers are able to discriminate against their captive customers, we show that discrimination harms consumers in aggregate relative to the situation with uniform pricing when sellers are approximately symmetric, while the practice tends to benefit consumers in sufficiently asymmetric markets.

We provide a simple necessary and sufficient condition for when a multiproduct demand system can be generated from a discrete choice model with unit demands.