In this paper we investigate the pricing incentives of IP holders and compare the equilibrium royalty rates charged by vertically integrated IP holders with those of non- integrated IP holders. We show that under many circumstances non-integrated companies are likely to charge lower royalties...

Standard policies to correct market power and selection can be misguided when these two forces co-exist. Using a calibrated model of employer-sponsored health insurance, we show that the risk adjustment commonly used by employers to offset adverse selection often reduces the amount of...

Bundled discounts by pairs of otherwise independent firms play an increasingly important role as a strategic tool in several industries. Given that prices of firms competing for the same consumers are strategic complements, one would expect their discounts levels also to be strategic...

We analyze the impact of passive partial ownership (PPO) on horizontal mergers. We show that antitrust authorities ignoring the effects of previous PPO acquisitions invite sneaky takeovers: a PPO is strategically used prior to a full takeover to get a merger approved which is in fact detrimental...

This paper examines the effects of obtaining a strategic advantage of becoming the leader in the market on insiders’ incentives to merge and consumer welfare. We show that being the market leader is privately profitable for the merging insiders. We also show that the leading merger would...

The traditional analysis of exclusionary bundling examines the impact of a monopolist bundling product A with another product B, which is competitively provided. Using experimental posted-offer markets, we investigate the exclusionary and welfare implications of having a fringe competitor in the...

We analyse the effects of predation in a vertical differentiation model, where the high-quality incumbent is able to price discriminate while the low-quality entrant sets a uniform price. The incumbent may act as a predator, that is, it may price below its marginal costs on a subset of consumers...

Boone (2008a) proposes a new competition measure based on Relative Profit Differences (RPD) that, from its theoretical properties, proves to be more robust than the Lerner-Index. However, the proof of the empirical practicability and robustness of the Boone-Indicator is missing. To fill this...

The arm's length principle states that the transfer price between two associated enterprises should be the price that would be paid for similar goods in similar circumstances by unrelated parties dealing at arm's length with each other. This paper examines the effect of the arm's length...

This paper is about conscious parallelism in a duopoly with differentiated products. Conscious parallelism is modelled by a "policy of fixed relative prices" (frp) i. e. starting from a competitive equilibrium both duopolists vary prices by the same percentage. This price increasing continues...