We analyze below-cost pricing in retail markets and examine its impact on social welfare as well as on suppliers' incentives to invest in quality. Considering negotiations about a linear wholesale price between the retailer and her suppliers, we find that below-cost pricing aggravates the double...

Die Webwirtschaft läuft Gefahr, ähnlich wie die Finanzwirtschaft, in sich zusammenzufallen. Gegen das Hauptübel, die Gratisangebote und die Jagd nach ihnen, geht die Autorin schonungslos vor - alles ökonomisch begründet.

I present a model of vertical product differentiation and exit where a domestic and a foreign firm face fixed setup costs and quality-dependent costs of production and compete in quality and price in the domestic market. Quality-dependent costs are quadratic in qualities, but independent of the...