A principal contracts with agents who have diverse abilities to forecast changes in their future tastes. While the principal knows that the agent’s tastes are changing, the agent believes that with probability ?, their future preferences will be identical to their present preferences. The...

This paper uses a unique data set of Latin American paintings auctioned by Sotheby's between 1995 and 2002 to investigate several puzzles from the recent auctions literature. Our results suggest that: (1) the reputation of an artist and the provenance of the artwork, omitted variables in most...

This paper studies how the existence of a potential entrant influences an incumbent’s choice of quality in a model of vertical product differentiation and entry. Both firms face fixed set-up costs and quality-dependent costs of production, and compete on quality and price. With identical...

There is a substantial theoretical literature on the potential effects of loyalty contracts, but a relative paucity of empirical work. This Paper employs the event study methodology to examine the effect of exclusionary contracts on firm performance in the ocean shipping industry. Shipping...

For many goods (such as experience goods or addictive goods), consumers' preferences may change over time. In this paper, we examine a monopolist's optimal pricing schedule when current consumption can affect a consumer's valuation in the future and valuations are unobservable. We assume that...

There is diverging empirical evidence on the competitive effects of horizontal mergers: consumer prices (and thus presumably competitors' profits) often rise while competitors' share prices fall. Our model of endogenous mergers provides a possible reconciliation. It is demonstrated that...

An upstream firm can license its innovation to downstream firms that have to exert further development effort. There are situations in which more licenses are sold if effort is a hidden action. Moral hazard may thus increase the probability that the product will be developed.

The paper offers a new theoretical framework to examine the role of intermediaries between creators and users of new inventions. We find that uncertainty about the profitability of investing in new inventions generates a basis for intermediation. An intermediary may provide an opportunity to...

We investigate the robustness of the new foreclosure doctrine and its associated welfare implications to the introduction of incomplete information. In particular, we let the upstream firm’s marginal cost be private information, unknown to the downstream firms. The previous literature has...

In a homogeneous good, Cournot duopoly model, entry may occur even when the potential entrant has no cost advantage and no independent access to distribution. By sinking its costs of production before negotiating with the incumbents, the entrant creates an externality that induces the incumbents...