Including the entry decision in a Bertrand model with imperfectly informed consumers, we introduce a trade-off at the level of social welfare. On the one hand, market transparency is beneficial when the number of firms is exogenously given. On the other, a higher degree of market transparency...

This article contributes to the debate of missing money (e.g. Joskow(2007)) which has seriously questioned the desirability of caps on scarcity prices in markets with fluctuating demand by emphasizing their potentially negative impact on firms investment decisions in the long run. A prominent...

We present the idea that quality cooperation and standardisation might raise network providers' incentives for product differentiation. As a result, the equilibrium outcome may be characterised by voluntary standardisation and maximum quality differentiation: This situation arises, if platforms...

We study own and rival risk in a dynamic duopoly with a homogeneous output good. A competitor's options to adjust capacity reduce own-firm risk through a simple hedging channel. For example, if a rival possesses a growth option, an increase in industry demand directly enhances current profits...

We analyse the efficiency effects of the initial permit allocation given to firms with market power in both permit and output market. We examine two models: a long-run model with endogenous technology and capacity choice, and a short-run model with fixed technology and capacity. In the long run,...

This paper investigates competition between health care insurance companies under different funding regulations. We consider two alternatives advanced in recent German health care reform discussions: competition by contribution rates (health contributions) and by fees (health premia). We find...

This article focuses on the location decision of firms when competing in a duopoly. Using a spatial Cournot setting, we evaluate what is the optimal location decision of both firms in the linear city. Our original contribution is that firms are dependent on a natural resource input to be able to...

We develop a model of a city populated by heterogeneous agents. Agents self-select into entrepreneurship, and entrepreneurs set up firms which hire workers. We characterize the equilibrium matching between firms and workers, as well as the within-city assignment of agents to locations. We then...

We propose a general model of monopolistic competition, which encompasses existing models while being flexible enough to take into account new demand and competition features. Using the concept of Frechet differentiability, we determine a general demand system. The basic tool we use to study the...