We consider consumer entry in the canonical monopolistic nonlinear pricing model ( Mussa and Rosen 1978) wherein consumers learn their preference “types” after incurring privately known entry costs. We show that by taking into account consumer entry, the nature of optimal nonlinear pricing...

Platforms often use fee discrimination within their marketplace (e.g., Amazon, eBay, and Uber specify a variety of merchant fees). To better understand the impact of marketplace fee discrimination, we develop a model that allows us to determine equilibrium fee and category decisions that depend...

Entry into a network industry is modeled, focusing on consumers' expectations formation. Equilibrium expectations are endogenous and they depend on prices, acting as a coordination device among consumers. The model is able to account for aggressive pricing policies by the incumbent and by the...

A number of technology products display positive network effects, and are used in variable quantities by heterogeneous customers. Examples include operating systems, infrastructure and back-end software, web services and networking equipment. This paper studies optimal nonlinear pricing for such...

We model the conditions under which incumbent firms may purposefully create an intellectual property commons such that no firm has the incentive to invest in new product development, despite the potential profitability of a public sector invention. The strategy of spoiling incentives to innovate...

Firms in durable good product markets face incentives to intertemporally price discriminate, by setting high initial prices to sell to consumers with the highest willingness to pay, and cutting prices thereafter to appeal to those with lower willingness to pay. A critical determinant of the...

In this paper we develop an analytical model that characterizes the structure of price dispersion observed in electronic markets. Findings of our model are consistent with empirical evidence in these e-markets. We show that when different types of buyers' have different search costs, firms...

Emerging tracking data allow precise predictions of individuals' reservation values. However, firms are reluctant to conspicuously implement personalized pricing because of concerns about consumer and regulatory reprisals. This paper proposes and applies a method which disguises personalized...