This chapter discusses the contractual relationship between two parties at successive stages in the vertical chain of production and marketing for a good. Intermediate good markets differ from final good markets, and thus merit independent study. First, intermediate good markets often involve...

Although network effects can make predation more likely to succeed, we find that the leading anti-predation rules may lower or raise efficiency and consumer welfare in network markets. We find that: (a) the extensive debates about the 'correct' measure of cost on which to base price floors are...

In systems industries, combinations of components are consumed together to generate user benefits. Arrangements among component providers sometimes limit consumers’ ability to mix and match components, and such exclusive arrangements have been highly controversial. We examine the competitive...

We analyze the central economic issues raised by U.S. v Microsoft. Network effects and economies of scale in applications programs created a barrier to entry for new operating system competitors, which the combination of Netscape Navigator and the Java programming language potentially could have...

Merger policy is the most active area of U.S. antitrust policy. It is now widely believed that merger policy must move beyond its traditional focus on static efficiency to account for innovation and address dynamic efficiency. Innovation can fundamentally affect merger analysis in two ways....

In this paper we analyze taxation using the conjectural variations model of oligopoly. We demonstrate the way in which the incidence of a tax depends upon the pattern of firm interaction. The results obtained have important implications for the controversy surrounding the question of whether a...

This article analyzes the behavior of a multiplant monopolist in a spatial market. After demonstrating that the profit maximizer may establish an excessive or insufficient number of plants, the article derives criteria by which to determine the direction of this distortion. The distortion arises...

In many markets, including payment cards and telecommunications, service providers operate networks that support customer transactions with each other. When the two sides of a transaction belong to more than one network in common, the question arises as to which network will carry the...

By a well-known argument, securities holders do not directly benefit from risk-reducing corporate diversification when they can replicate this difersification on their own. Some have argued that corporate diversification may be of value, or can otherwise be explained by, the agency relationship...