In this paper we study the cost of adding additional capacity to transport oil from Saudi Arabia and Kuwait to the Red Sea. If this capacity is obtained by adding power to the existing pipelines, the cost would increase by approximately 14 cents per barrel, but would require large capital expenditures. If this capacity is obtained by using Drag Reduction Agents, the cost would increase by 25 to 65 cents per barrel with minor capital expenditures. Since Arabian oil is inframarginal, these increased costs should have no impact on the supply of oil.

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The article reviews the book "Optimal Pricing, Inflation, and the Cost of Price Adjustment," edited by Eytan Sheshinski and Yoram Weiss.

We analyse a duopoly model where firms first choose locations on a line seqment and then choose quantities in the second stage. Pure strategy quantity equilibria fail to exist for locations close together. For low transport costs, near agglomeration occurs and the firms choose locations where pure strategy quantity equilibria exist. As transport costs rise, firms become less direct competitors as they move away from the centre of the market. /// La concurrence par les quantités dans un modèle spatial. Les auteurs analysent un modèle de duopole où les firmes choisissent d'abord leur localisation le long d'un segment linéaire et puis, dans un second temps, les quantités qu'elles désirent produire. On montre qu'il n'est pas possible d'établir l'existence d'équilibres pour de pures stratégies de quantités quand il s'agit de localisations trop rapprochées. Quand les coûts de transport sont faibles, il y a presqu' agglomération et les firmes choisissent des localisations telles que des équi

This paper analyses the optimum pricing policies of a multiproduct monopoly in the presence of inflation and fixed costs of nominal price changes. We examine the conditions which lead to staggered or synchronized pricing policies when the timing of price changes is endogenous. Two aspects of the decision problem are emphasized: the interactions in the joint profit function between the prices of the various goods and the interactions in the costs of price adjustment. We show that with positive interactions in the profit function and costs of price adjustments that are independent across products, staggering is unlikely. Depending on initial conditions, a firm may follow a staggered steady state or a synchronized steady state path. But the former is locally unstable while the latter is attained from a broad set of initial conditions. For a small rate of interest the staggered policy is optimal iff the interaction in profits is negative.