Economists have emphasized the role of dissipative advertising and price as signals of quality. Most works, however, limit the number of types to two options: high and low quality. Yet, production costs and quality both result from Ramp;D efforts and therefore are both uncertain. I characterize...

We develop a general equilibrium model of monopolistic competition with a traded and a non-traded sector. Using a broad class of homothetic preferences—that generate variable markups, display a simple behavior of their elasticity of substitution, and nest the ces as a limiting case—we show...

This paper studies a selling mechanism where the seller first charges a fee for advice (information structure) then sells a product. When the buyer has no private information, the seller can extract full surplus, both when the seller has private information and when he doesn't. If only the buyer...

The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most exible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital...

We study price dynamics for computer components sold on a price-comparison website. Our fine-grained data — a year of hourly price data for scores of rival retailers — allow us to estimate a dynamic model of competition, backing out structural estimates of managerial frictions. The estimated...

In this study, we investigate behavioral constraints on pricing by using a novel laboratory experiment in which actual consumption goods are traded. We test different models and provide several insights into pricing and reactions to price discrimination. First, we identify the extent to which...

We study the effects of horizontal mergers when firms compete on quality and price. Two key factors are identified: (i) the magnitude of variable quality costs, and (ii) the relative magnitudes of cross-quality and cross-price effects on demand. The merging firms will increase (reduce) both...

Pay What You Want (PWYW) can be an attractive marketing strategy to price discriminate between fair-minded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that...

We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash...

We assess empirically the micro-foundations of producers' sticky pricing behaviour. The intertemporal profit function considered accounts for various functional forms of menu costs. The focus is on the analysis of multiproduct plants, and the menu costs therefore also allow for economies of...