We here want to analyze how the imperfect competition mark-up and pass-through are transmitted through the production chain and how they change, as a function of the number of firms existing at each production stage. In order to have an analytical closed form solution, we use the standard linear...

The paper studies the impact of homophily on the optimal strategies of a monopolist, whose marketing campaign of new product relies on a word of mouth communication. Homophily is a tendency of people to interact more with those who are similar to them. In the model there are two types of...

This paper studies two-part tariffs with explicit consideration of cost uncertainty and risk aversion. It finds that firms charge a risk premium over expected marginal cost for each unit they sell. This pricing rule is socially optimal if and only if the modeled market is fully covered in...

Under demand uncertainty, a risk-averse seller adopts marginal-cost pricing when clients are homogenous. When the clients are heterogeneous, the optimal unit price tends to move towards marginal cost as the seller's risk aversion increases and equals marginal cost if the seller is infinitely...

Under demand uncertainty, a risk-averse firm adopts marginal-cost pricing when consumers are homogenous. When consumers are heterogeneous, the equilibrium price tends to move towards marginal cost as the firm's risk aversion increases and it equates marginal cost if the firm is infinitely risk...

We present a diagrammatic and step-by-step analysis of price signaling quality. Because quality is a continuum on the real positive line, out-of-equilibrium beliefs need not be specified, i.e., every positive price is a positive outcome in equilibrium. We first study the behavior of the monopoly...

We investigate the pricing policy and the welfare effects associated with a firm's ability to commit to future prices in a storable good market where the cost of production varies over time. If the cost is expected to increase, the firm's lack of commitment generates price changes relative to...

I study a monopolistic pricing problem in which the consumer performs product research to determine whether or not to purchase a good. The consumer receives a signal of quality via a Brownian motion process with a type-dependent drift. I fully characterize the consumer's optimal strategy; she...

We provide a general definition of bundling that encompasses the bundling of two or more objects over sets of three or more objects. Bundled objects may be units of the same product, different products, or both. Such bundling encompasses a range of controversial pricing practices that have drawn...

This paper explores a monopolist's optimal multi-tier quantity-discount prices and shows that only the last tier's marginal cost is relevant in determining the tier prices and each tier's price is equal to its preceding tier's marginal revenue. An increase in total output is associated with...