This paper studies the emergence of firm asymmetry as an equilibrium outcome. We consider differentiated Cournot and Bertrand duopolies where firms endogenously select their organizational governance and their timing strategy. For Cournot competition asymmetric and symmetric equilibria may...

The traditional concentration of basic research activities in academic settings, with applied research more prevalent in industrial settings, is a distinguishing feature of science and technology markets. This structure arises from a unique combination of product characteristics, and in turn it...

This paper formalizes the intuition that brands are consumed for image reasons and that advertising creates a brand's image. The key idea is that advertising informs the public of brand names and creates the possibility of conspicuous consumption by rendering brands a signalling device. In a...

Homogeneous products are often sold by chains and locals but the chains charge higher prices. We explain this pricing pattern as well as the empirical fact that chains became increasingly dominant at the same time as consumer mobility increased: Consumers bear setup costs whenever they visit a...

It is well-known that a monopolist cannot commit to offer a high-quality contract to a consumer reading costs are positive. This paper shows that this also holds in a competitive environment with consumer heterogeneity if the contract space is unrestricted. If firms can offer standardized...

This paper studies profit-maximizing seller behavior when brand image affects demand. We consider a seller facing a population of consumers with heterogeneous tastes regarding product quality and brand image. First, we analyze active branding by the seller through costly advertising. Our...

This paper studies welfare consequences of consumer-side market transparency with endogenous entry of firms. Different from most studies, we consider the unique symmetric entry equilibrium, which is in mixed strategies. We identify two effects of market transparency on welfare: a competition...

In markets for credence goods, such as doctor visits, customers sample a firm for a few periods, before deciding whether to retain or fire that firm. In our model, customers have endogenously determined patience in tolerating bad outcomes from credence-good providers. The more competitive the...

We examine the behavior of a firm that produces a product with a privately-observed safety attribute. Costly disclosure and price-signaling of safety are alternative firm strategies. The liability system and production cost determine the firm's full marginal cost. When the firm's full marginal...

Tying contracts are well-known for their anti-competitive potential. This paper questions their negative image by showing that tying contracts can be necessary to implement price signals which overcome problems of asymmetric information in the introductory phase of a new durable product. The...