We study an asymmetric information model in which two firms are active on a market where buyers only observe the average quality supplied. Quantities and cost structures are exogenously given and firms compete in quality. Before choosing their qualities, they bargain over a perfectly enforcable...

We provide a framework for analyzing bilateral mergers when there is two-sided asymmetric information about firms’ types. We show that there is always a "no-merger" equilibrium where firms do not consent to a merger, irrespective of their type. There may also be a "cut-off" equilibrium if the...

This paper compares the equilibrium outcomes from a recently developed model of procurement competition with differentiated products to those from two analytically tractable models that might naturally be considered as suitable proxies. The models differ in what sellers know about the buyer's...

The antitrust laws are increasingly used to prosecute alleged acts of market manipulation, particularly against firms in the banking and energy industries. Both industries are now regulated subject to fraud-based market manipulation rules, but antitrust remains a vehicle on which private claims...

This paper discusses a model where consumers simultaneously differ according to one unobservable (preference for quality) and one observable characteristic (location). In these circumstances nonlinear prices arise in equilibrium. The main question addressed in this work is whether firms should...

We incorporate a search-theoretic model of imperfect competition into a standard model of asymmetric information with unrestricted contracts. We characterize the unique equilibrium, and use our characterization to explore the interaction between adverse selection, screening, and imperfect...

This note explores asymmetries in the way consumers sample prices in a simple variation of Stahl's (1989) seminal model of sequential search. In the note, we characterize a unique equilibrium in which a firm that caters to more local consumers selects prices from a distribution which first order...

In the context of supply function competition with private information, we test in the laboratory whether — as predicted in Bayesian equilibrium — costs that are positively correlated lead to steeper supply functions and less competitive outcomes than do uncorrelated costs. We find that the...

We propose an empirical framework for a Cournot-oligopoly model where firms have private information about their own marginal costs. Considering a linear demand with random intercept, we characterize the Bayesian Cournot-Nash equilibrium and determine testable implications from the joint...

The answer is no. Although naive intuition may suggest the opposite, uncertainty about costs in the homogeneous-good Bertrand model intensifies competition: it lowers price and raises total surplus (but also makes profits go up). For some economic environments, this is implied by Hansen's (RAND,...