The definition of emergence remains problematic, particularly for systems with purposeful human interactions. This study explores the practical import of this concept within a specific market context: namely, a double-auction market for wholesale electric power that operates over a transmission...

Under continual innovation, greater patent strength expands innovating firms’ profit against imitation, but also shifts profit from current to past innovators. We show how the impact of patents on innovation, as determined by these two opposing effects, varies with industry characteristics....

We analyze the impact of institutional and cultural factors on the supply side of open source software (OSS). OSS is a privately provided public good: it is marked by free access to the software and its source code, and is developed in a public, collaborative manner by thousands of volunteers as...

The purpose of this paper is to provide a simple model to explain buyer–supplier relationships and identify factors that determine the chosen number of trading partners. We show that the optimal number of partners for a supplier is small, if it has low bargaining power, moderate economies of...

The market for retail financial products (e.g., investment funds or insurances) is marred by information asymmetries. Clients are not well informed about the quality of these products. They have to rely on the recommendations of advisors. Incentives of advisors and clients may not be aligned,...

We study persuasion in a modified Crawford–Sobel sender–receiver game in which the receiver makes a binary decision to accept or reject a good recommended by the sender. The good's quality and the sender's type (neutral or biased) are not observable to the receiver. These alterations yield a...

This paper provides a formal analysis of persuasive advertising when firms compete for consumers with heterogenous social attitudes towards the consumption by others. Deriving product demand from primitives, we show that the demand-enhancing effect of persuasive advertising varies across...

Emotions are a significant determinant of consumer behavior. A customer may get angry if he feels that he is being treated unfairly by his supplier and that anger may make him more likely to switch to an alternative provider. We model the strategic interaction between firms that choose quality...

We analyze a market with n rational firms (doctors) and a continuum of boundedly rational consumers (patients). Following Spiegler (2006a), we assume that patients are not familiar with the market and rely on anecdotes. We analyze the price setting game played by doctors with given, different...

This paper proposes a theory of competition and customization. When firms allocate their production to both custom-made and standardized products, the fraction of sales from the former will increase in the face of increased competition. Recent surveys conducted by the World Bank on Chinese firms...