costly entry, in our model both quality distortion and market exclusion are reduced, sorting is more likely, and whenever … bunching occurs, the bunching interval is necessarily smaller. Additionally, under certain conditions the monopoly solution may … even achieve the first best (i.e., production efficiency). We also demonstrate that the optimal monopoly solutions can be …

determinant of the feasibility of such signaling. A firm may use price alone as a signal, or price and quality together. Both …If a product has two dimensions of quality, one observable and one not, a firm can use observable quality as a signal … of unobservable quality. The correlation between consumers' valuation of high quality in each dimension is a key …

The paper studies the use of emission taxes and feed-in subsidies for the regulation of a monopoly that can produce the … the regulator and the monopoly with the regulator acting as the leader of the game. We find that the second-best tax rate …

-horizon, discrete-time game. Our goal is to identify the Markov perfect stationary equilibria where the seller can maintain his monopoly … power. We establish that the set of parameters supporting a monopoly outcome is larger when the seller offers different … quality versions of the same product. Hence, our results suggest that, when the innate durability of a product is high, the …

quality can be signaled by high prices is based on the assumption that higher quality necessarily incurs higher production … cost. In this paper, the authors argue that firms producing high-quality products have a stronger incentive to lower the … marginal cost of production cost because they can then sell larger quantities than low-quality firms can. If this dynamic …

We investigate strategic information transmission with communication error, or noise. Our main finding is that adding … noise can improve welfare. With quadratic preferences and a uniform type distribution, welfare can be raised for almost … every bias level by introducing a sufficiently small amount of noise. Furthermore, there exists a level of noise that makes …