Post-crisis events following the 2008 Great Recession prompted researchers to question macroeconomic modelling and rethink the presence of the Mundellian policy trilemma. This conjecture posits that among monetary policy independence, fixed exchange rates and unrestricted capital flow, only two can be attained. Citing the central position of the U.S. dollar in global financial markets and its role in shaping worldwide credit conditions, Rey (International Monetary Fund (IMF) Economic Review, 2016) postulated that the trinity presents a dilemma. A small open economy (SOE) has to choose between unlimited participation in the financial system and autonomous monetary policy. Similarly, Edwards (The World Economy, 2015) inspected co-movements of the Federal Reserve and Latin American banks' policy rates, discovering a strong relationship due to the role of the U.S. dollar as the main trade currency.

This paper models a consumer loan market with a vertical structure where an upstream monopolist supplies funds to downstream nonbanks. The nonbanks supply funds to consumers in the consumer loans market. An inverse demand function of the consumer is linear. The downstream nonbank freely enters the market as long as it earns a positive profit. First, this paper derives free-entry equilibrium without government regulation. Next, this paper examines the effects of government regulation on the entry of nonbanks. Two regulatory schemes are investigated: partial regulation, wherein the government can only control the interest rate the monopolist sets, and full regulation, wherein the government can control the number of nonbanks as well as the interest rate. This paper presents four new results. First, downstream firms insufficiently enter the market under partial regulation. Second, downstream firms excessively enter the market under full regulation. Third, the establishment of the upstream public firm improves welfare even though its profit is negative under partial regulation. Fourth, full regulation is welfare improving compared to partial regulation.

Competition is a key feature of the market process assumed to improve market outcomes. But how strong is the relationship between competition and positive consumer experiences, and how does the relationship vary across space and type of competitor? Phoenix is a suitable setting in which to explore these questions because it is a major metropolitan area with thousands of unique restaurants rated on Yelp. The consumer experience is measured based upon Yelp user-generated reviews through July 2016, with higher ratings reflecting better customer experiences. Competition is defined in different ways depending upon the number of overall, same-price and same-type restaurants nearby. Given differences between chain and independent restaurants, competition is further segmented across these two types of establishments. After controlling for restaurant characteristics, census-tract-level demographics, census-tract fixed effects and sub-industry fixed effects the results suggest that spatial competition is only associated with better customer experiences for same-category independent restaurants within driving distance (1-5 miles). The association is not present for overall and same-price independent restaurant competition nor for chain restaurants. Consistent with the sprawling layout of the Phoenix area, the effect of competition is only for restaurants within driving distance. These findings are relevant for cities designing policies to attract residents by offering high-quality consumer amenities.

The initial online publication contained several typesetting errors. The original article has been corrected.