This paper studies the consequence of an imprecise recall of the price by the consumers in the Bertrand price competition model for a homogeneous good. It is shown that firms can exploit this weakness and charge prices above the competitive price. This markup increases for rougher recall of the...

We analyze the link between entry and R&D spending distribution. We consider a monopolistic competitive market with free entry in which firms can invest in cost-cutting R&D by paying a fixed cost first. For an intermediate level of fixed cost, there is a unique equilibrium in which the market...

TransDigm is a highly acquisitive company that manufactures a wide range of highly engineered aerospace parts with highly successful, but controversial strategy. On the one hand, its stock price had increased by over ten times in ten years since its IPO in March 2006, and both its revenues and...

The "spokes model" takes the name from its graphical visualisation, that resembles the spokes of a bike's wheel. It describes a market as a collection of spokes, joining at a common centre, where consumers are located. Firms may be situated at the extreme of these spokes, at the interior of the...

Whether a two-sided platform faces a critical-mass problem in its start-up phase depends on how difficult it is to get each of the sides on board when the other side is not yet there – the so-called chicken-and-egg problem. If there is no chicken-and-egg problem, there is no critical-mass...

Crowdfunding has mostly been used to finance very unique projects. Recently, however, companies have begun using it to finance more traditional products where they compete against other sellers of similar products. Major crowdfunding platforms, Kickstarter and Indiegogo, as well as Amazon have...

We estimate the cost of transporting corn and the resulting degree of spatial differentiation among downstream firms that buy corn from upstream farmers and examine whether such differentiation softens competition enabling buyers to exert market power (defined as the ability to pay a price for...

We introduce a new class of quot;increasing elasticity of substitutionquot; (IES) preferences to model product differentiation. In a monopolistic competition setting a la Dixit - Stiglitz (1977) we find that, even under constant returns to scale and complete information, a rise in the number of...

This paper studies two-part tariffs with explicit consideration of cost uncertainty and risk aversion. It finds that firms charge a risk premium over expected marginal cost for each unit they sell. This pricing rule is socially optimal if and only if the modeled market is fully covered in...

We present a model where firms engage in imperfect price competition, firms cannot sell to all consumers. A bipartite network structure models the local interaction of firms and consumers. We solve for the unique equilibrium of duopolistic price competition and study the implications of network...