We study consumer response towards sponsored search advertising and how to improve advertising performance on a large e-commerce platform. Our research design is based on a field experiment which randomizes the salience of ad disclosure to consumers, and a natural experiment which eradicates a...

We analyze vertical product differentiation in a model where a good's quality is unobservable to buyers before purchase, a continuum of quality levels is technologically feasible, and minimum quality is supplied under competitive conditions. After purchase the true quality of the good is...

Empirical evidence shows that the perception of information is strongly concentrated in those environments in which a mass of producers and users of knowledge interact through a distribution medium. This paper considers the consequences of this fact for economic equilibrium analysis. In...

In the seminal rational inattention model of Matĕjka and McKay (2015), logit demand arises from the discrete choice of agents who are uncertain about choice payoffs and who have access to a flexible, costly information acquisition technology (RI-logit). A notable limitation of this powerful...

This paper analyzes the generalized quality differentiation model in multi-sided markets with positive externalities, which leads to new insights into the optimal pricing structure of the firm. We find that quality differentiation for users on one side affects not only the side involving...

A monopolist producing vertically differentiated durable goods can offer in each period a sequence of price-quality menus to segment the market. We show that, contrary to the Coase conjecture for the homogeneous durable good monopoly, thanks to the ability to produce differentiated durable...

In a standard adverse selection world, asymmetric information about product quality leads to quality deterioration in the market. Suppose that a higher investment level makes the realization of high quality more likely. Then, if consumers observe the investment (but not the realization of...

We analyse optimal environmental policies in a market that is vertically differentiated in terms of the energy efficiency of products. Considering energy taxes, subsidies to firms for investment in more eco-friendly products, and product standards, we are particularly interested in how...

This paper studies the interactions between the structure of product demand, relative wages, and the allocation of economic activity across two sectors. The agrarian sector produces a homogeneous good and consists of informal firms employing adults and children. The modern sector produces a...