A partnership is a coalition that divides its output equally. The authors show that when partnerships can form freely, a stable or "core" pa rtition into partnerships always exists and is generically unique. Wh en people differ in ability, the equal-sharing constraint inefficient ly limits the...

The authors show that a new product monopolist may benefit from (delayed) competition if consumers incur setup costs. Setup costs create a dynamic consistency problem: the monopolist cannot guarantee low future prices once customers have incurred those costs. The authors show that, if customers...