We analyze the strategic behavior of firms when demand is determined by a rule of thumb behavior of consumers. We assume consumer dynamics where individual consumers follow simple behavioral decision rules governed by imitation and habit as suggested in consumer research. On this basis, we...

We extend Bresnahan and Reiss’s (1991) model of local oligopoly to allow firm entry and exit over time.In our framework, entrants have to incur sunk costs in order to enter a market. After becomingincumbents, they disregard these entry costs in deciding whether to continue operating or to...

Using a comprehensive dataset on the incidence of price-fixing across British manufacturing industries in the 1950s, I compare collusive and competitive industries and find evidence of a negative relationship between collusion and the labour productivity of larger firms relative to smaller...