This paper examines the welfare implication of banning price discrimination in the intermediate goods market in which a monopolistic supplier contracts with asymmetric downstream retailers. We demonstrate that the supplier has a strong incentive to manipulate the interdependent demand structure...

We visit the role of privatization in the location decision of firms in an industry where no firm can produce all varieties demanded. We demonstrate that the Nash equilibrium locations are socially optimal, in the presence of a publicly owned firm, notwithstanding the degree of privatization.

This paper analyzes the unilateral choices of application compatibility by platforms and the endogenous affiliations of two different groups (content providers and users). We find a novel result that for both platforms to unilaterally choose application compatibility is not an equilibrium unless...

Payment networks typically differentiate interchange fees across different merchant sectors. This paper shows that it is generally efficient for a regulator to leave the decision on the structure of interchange fees to payment networks.

This paper studies the impact of relative performance evaluation (RPE) on the equilibrium locations in a Hotelling model with quadratic transportation cost. It is shown that equilibrium location varies from maximum differentiation to minimum differentiation, depending upon the relative strength...

Random choices of prices and product characteristics can be used by a contestable monopolist to deter entry and fully extract the monopoly rent. We develop this idea in a model of Bertrand price competition. In equilibrium, one firm enters the market and makes choices that are unpredictable to...

The upper tail of the size distribution of websites follows a power law with slope close to one (Zipf’s law). This finding is robust to measuring website size by unique visitors and page views, and holds for the United States, Germany, and the world. Web traffic in China has less support for a...

We revisit the effects of switching costs on dynamic competition. We consider stationary Markovian strategies, with market shares being the state variable, and characterize a relatively simple Markov Perfect pricing equilibrium at which there is switching by some consumers at all times. For the...

This paper investigates the size of penalties required to deter cartel formation. Allowing the penalty to be increasing in duration within the infinitely repeated game framework, penalties do not need to be as severe as previous research would suggest.

This paper studies whether bank competition affects growth of non-banking industries. We find that non-cooperative bank competition and stability promote industrial growth robustly. Bank concentration may also affect growth positively; the latter effect increases for higher levels of competition.