We analyze the existence of pure strategy symmetric price equilibria in a generalized version of Salop (1979)'s circular model of competition between differentiated products - namely, we allow consumers to purchase more than one brand. When consumers purchase all varieties from which they derive...

The traditional argument that shorter product cycles favor trade secret over patenting is reviewed. A game theoretic model provides an argument that shorter product cycles can induce firms to file more patent applications. The firms may be trapped in a prisoners' dilemma where all firms would...

Successful upstream collusion must satisfy both the incentive constraint (keeping cartel members in line) and the compensation constraint (preventing lawsuits from downstream firms). Our analysis shows that there is a non-monotonic and inverted U-shaped relationship between cartel incidence and...

This paper analyzes the price-setting behavior of multiproduct firms in a differentiated product market. The structure considered is one where large companies offer either a set of close substitutes (market segmentation) or a set of distant substitutes (market interlacing). The modelling...

We examine the effect of a threat of entry on experimentation about demand by an incumbent monopolist when there is a fixed cost of entry. We also examine the impact of experimentation on the probability of entry into the market. We show that experimentation may itself be used as a tool for...

A robust result in the literature on strategic incentives pioneered by Fershtman and Judd (1987), Sklivas (1987), and Vickers (1985) is that under quantity competition firm owners induce their managers to make aggressive quantity choices in the product market. We revisit this result in a...

This paper studies the effect of competition and consumer myopia on platform profits. The focus is on airports, which provide passengers with aeronautical and commercial services through airlines and retailers. Our results can be summarized as follows. First, we unravel the relationship between...

Using the overcharge estimates for 406 cartel episodes, I evaluate the impact of cartel characteristics and market environment on the size of the overcharges imposed by cartels in different geographic markets and during six antitrust law regimes starting from the 18th century. I find that the...

The purpose of this note is to introduce how to evaluate strategic choices of the firm using economic principles. The procedure is based on simple cost benefit considerations such as building on the economic principles of incentive compatibility constraints based in Game Theory

Many countries are pursuing innovation-led ‘smart' growth, which requires certain types of long-run strategic investments. This paper argues that such investments require public policies that aim to create markets, rather than just ‘fixing' market failures (or system failures). Such...