Advances in information technology increasingly allow firms to identify expensive, high-cost customers, who are not only individually less profitable for firms but also raise the average marginal cost incurred by firms and thus impose a negative externality on inexpensive customers. Should...

Commercial open source software (COSS) products--privately developed software based on publicly available source code--represent a rapidly growing, multibillion-dollar market. A unique aspect of competition in the COSS market is that many open source licenses require firms to make certain...

Firms in several markets attract consumers by offering discounts in other unrelated markets. This promotion strategy, which we call "cross-market discounts," has been successfully adopted in the last few years by many grocery retailers in partnership with gasoline retailers across North America,...

A low-cost incumbent may limit price to informatively signal her cost to an uncertain potential entrant, and therefore deter entry. We enrich this model by investigating the strategic pricing behavior of the incumbent when she operates in multiple markets. We demonstrate that the low-cost...

Better targeting opportunities and the increasing role of information-intensive environments have created new challenges for firms in obtaining customer information. Such information can help firms increase their profits through cross-selling opportunities. However, revealing personal...

We study the signalling strategy of a principal who is privately informed about its high demand potential to an uninformed risk-neutral agent. We analyze the model in the context of a contract between a franchisor and a franchisee. We examine the distortions of a two-part pricing scheme...

The growing dominance of large retailers has altered traditional channel incentives for manufacturers. In this paper, we present a theoretical model to illustrate a strategic manufacturer response to a dominant retailer. In our model, a dominant and a weak retailer compete for the sale of a...

Reward programs, a promotional tool to develop customer loyalty, offer incentives to consumers on the basis of cumulative purchases of a given product or service from a firm. Reward programs have become increasingly common in many industries. The best-known examples include frequent-flier...