We examine welfare effects of real-time pricing in electricity markets. Before stochastic energy demand is known, competitive retailers contract with final consumers who exogenously do not have real-time meters. After demand is realized, two electricity generators compete in a uniform price...

International openness enhances social interactions between citizens of different countries or regions and vice versa. Social exchanges, in turn, increase trade flows between countries and influence markets and prices. We analyze the increased mobility that follows from openness between two...

Duopolists selling differentiated products can generate less consumer surplus than a monopoly selling one of the products. In a Hotelling-type model where a monopoly supplies more than half of potential consumers, but not all, entry by a rival leads to a duopoly price that is higher than the...

This survey aims to provide an overview of recent developments in the industrial organization literature that explores the behavior of profit-maximizing firms facing consumers with reference-dependent preferences and loss aversion. We discuss the implications of loss aversion on the practice of...

This paper studies the impact of competition on the benefits of advance selling. I construct a two-period price-setting game with heterogeneous consumers and two firms that produce different brands. Some consumers prefer one brand, others prefer the other brand. Consumers derive common value...

Revisions incorporated into the Horizontal Merger Guidelines in 2010 claim that the Department of Justice and the Federal Trade Commission consider anticompetitive effects to product “variety” when evaluating mergers. The Guidelines do not, however, explain the methodology or tools that can...

This note compares monopoly equilibrium outcomes with those of duopoly when firms price their products with two-part tariffs. Although a monopolistic firm never charges a lower marginal price than imperfectly competitive firms, it sets a lower entry fee under certain market conditions. In turn,...

We develop a model of search among substitutes for the best combination of commodity variant and price, in which the structure of search costs is manipulable by the suppliers of these variants, e.g., by joining an existing market or opening a new one. We analyze the subgame-perfect equilibria...

We study an Hotelling-type model with income constrained consumers. As income constraints bind, the subgame perfect equilibrium locations exhibit intermediate differentiation and reduced prices. When income becomes more restrictive, firms settle on the socially optimal degree of differentiation....

Although the WIC food assistance program purchases over one-half of all US infant formula, I find the program has little impact on the prices paid by non-WIC customers. I estimate infant-formula marginal cost and find that it is low compared to price, implying large price-cost markups. But, the...