Committing to prices that result in rationing may be more profitable than setting market-clearing prices if customers must make sunk investments to enter the market. Rationing is ex post inefficient, but it gives more surplus to lower-value customers who are the marginal consumers the...

Setting a price that results in rationing may be optimal for a seller whose customers must make a specific investment to be able to use its product. Rationing results in ex-post inefficiency, but the resulting distribution of ex-post surplus can compensate consumers for their...

In a winner-take-all duopoly market for systems in which firms invest to improvetheir products, a monopoly supplier of an essential system component may havean incentive to advantage itself by technological tying; that is, by designing thecomponent to work better in its own system. If the...