We apply an indirect method to test for the extent of loss leader pricing. Specifically, the extent of loss leader pricing should increase with the profit from other regularly-priced items. Bookstores customarily use bestsellers as loss leaders. Among conventional bookstores, we found that the...

This chapter reviews economic analyses of privacy. We begin by scrutinizing the “free market” critique of privacy regulation. Welfare may be non-monotone in the quantity of information, hence there may be excessive incentive to collect information. This result applies to both non-productive...

We show that returns policies do increase manufacturer profitability by attenuating price competition between retailers. This effect holds only in the presence of end-user demand uncertainty. The conditions under which a returns policy raises the manufacturer's profit are weaker when retailing...

Parallel imports are a significant academic and policy issue. Official investigations into the impact of parallel imports on music CD prices have reached widely conflicting conclusions. This note reports an event study on an international panel of changes in copyright law to permit or disallow...

The objective of patent rights is to foster innovation and economic growth. However, to date, there is little robust evidence that patents achieve this objective. Here, we study the impact of changes in effective patent rights within panels of up to 54 manufacturing industries in up to 72...

This article studies the role of installment payments in relationships characterized by moral hazard and sunk costs. We rule out vertical integration and payments contingent on the product of the contractor. Instead, each payment is negotiated as and when made. In such circumstances, an initial...

How can two physically identical gasoline stations differentiate themselves? In this article we develop and test a model of service time competition: some stations set higher prices and thereby offer shorter queues, whereas others offer lower price and longer queues. We find that retail demand...