We show that the entry of a second firm in a horizontally differentiated market (ala Hotelling) may harm consumers as prices increase and consumer's surplus possibly decrease. We first derive the price and the consumer's surplus of a monopoly which is located at the center of the market. When a...

Using estimable concepts, this paper provides sufficient conditions for third-degree price discrimination to increase or decrease aggregate output, social welfare, and consumer surplus in differentiated oligopoly when all discriminatory markets are open even in the absence of price...

We analyze a model of cost-reducing R&D and compatibility decisions by two platforms. After an exogenous improvement in the efficiency of R&D, each platform has a heightened incentive to make its software incompatible with the rival's hardware device to avoid being dominated in the hardware...

We study consumer surplus in a single market when (a) there is a lower bound in the consumption of the outside good and (b) the weights in the social welfare function given to consumers and firms are different. We assume quasilinear utility. When the lower bound constraint on the consumption of...

In a vertically separated industry, where the input suppliers have significant market power, not only entry but also the markets (upstream and downstream) with entry possibilities might be a concern to the policy makers. While 'entry in the downstream market only' always increases welfare,...

In their quest to maximize efficiency, law and economics scholars often produce novel, creative, and counterintuitive legal rules. Indeed, legal economists have argued for baby selling, against anti-discrimination laws in the workplace, and for insider trading. In this essay, we discuss some...

Conditions are derived for relating household well-being functions to household utility. In particular, an isomorphic relationship between the equivalent incomes stemming from subsistence-based utility functions and well-being functions is established. This allows estimates from standard models...

Behavioral paternalism raises deep concerns that do not arise in traditional welfare economics. These concerns stem from behavioral paternalism's acceptance of the defining axioms of neoclassical rationality for normative purposes, despite having rejected them as positive descriptions of...

This paper studies the Rawlsian first-best allocation in a monocentric city model using a unifying framework of land ownership. We show that a Rawlsian planner would not choose the market outcome, except for the extreme case of public land ownership in which all the differential rent is...