Firms selling a product with congestion externalities to a heterogeneous population of customers have an incentive to offer differentiated levels of quality. In a price competitive market, differentiation arises endogenously through the prices chosen by firms. In equilibrium, firms offer a range...

Firms can form partial ownership arrangements by purchasing claims to competitor's profits in order to commit to less aggressive competition. These arrangements can increase profits for all firms in the industry even in the absence of synergies. Using a conjectural variations model, the author...