We show that the Bertrand oligopoly model with cost asymmetries may admit multiple Nash equilibria when firms hold passive ownership stakes in each other. The equilibrium price may be as high as the monopoly price of the most efficient firm.

A frequently heard explanation for the underdeveloped metro system in Rome is the following one: If we tried to build a new metro line, it would probably be stopped by archeological finds that are too valuable to destroy, so the investment would be wasted. This statement, which seems...

This paper proposes a two-good model of price competition, where some consumers visit all shops and others visit only one. We find that information frictions lead to price dispersion. When the two goods are complements, their prices will tend to be negatively correlated, so if one is priced...

I show that the equilibrium derived in Gravelle and Sivey (2010) cannot hold for rational consumers. I then partially characterize the continuum of possible equilibria for rational consumers.

Although (or because) it is uncommon to observe consumers bargaining at retail stores in the Western world, the circumstances under which retail rms are actually willing to bargain is largely unknown. We construct a theoretical model in order to better understand how price and rm characteristics...

When consumers search sequentially for prices and product matches, their beliefs of what they will encounter at the next rm are important in deciding whether or not to continue to search. In search environments where retailers have a common cost that is not known to consumers and is either the...

This paper studies observational learning in a consumer search environment. In our model, consumers observe the purchasing decision of a predecessor before deciding which rm to visit. We show that if consumers emulate their predecessor and initiate their search at the rm she purchased from, a...

I show that the equilibrium derived in Gravelle and Sivey (2010) cannot hold for rational consumers. I then partially characterize the continuum of possible equilibria for rational consumers.

This paper shows that the double marginalization problem signicantly underestimates the ineciencies arising from vertical relations in markets where consumers who are uninformed about the wholesale arrangements be- tween manufacturers and retailers search for the best retail price. Consumer...