"The received wisdom is that sunk costs create a barrier to entry-if entry fails, then the entrant, unable to recover sunk costs, incurs greater losses. In a strategic context where an incumbent may prey on the entrant, sunk entry costs have a countervailing effect: they may effectively commit...

We study oligopoly price competition between multiproduct firms---firms whose products interact in the profit function. Specifically, we focus on the impact of intrafirm product interactions on the level of equilibrium profits. This impact may be decomposed in two different ways: (a) a direct...

Over the past twenty years, the study of industrial organization--the analysis of imperfectly competitive markets--has grown from a niche area of microeconomics to a key component of economics and of related disciplines such as finance, strategy, and marketing. This book provides an issue-driven...

I consider an infinite-period race where players choose between low- and high-variance motion technologies. I provide sufficient conditions under which, in equilibrium, the leader chooses a safe technology and the laggard a risky one, thus formalizing the sports intuition that the laggard has...

Empirical evidence suggests that prices are sticky with respect to cost changes. Moreover, prices respond more rapidly to cost increases than to cost decreases. We develop a search theoretic model which is consistent with this evidence and allows for additional testable predictions. Our results...

We propose a difference-in-differences (DiD) approach to estimate the impact of incentives on cost reduction. We show theoretically, and estimate empirically, that German electricity distribution system operators (DSOs) pile up more costs in the year used to determine future prices when subject...