We model a vertically differentiated duopoly with quantity-setting firms as an extended game in which firms noncooperatively choose the timing of moves at the quality stage, to show that at the subgame, perfect equilibrium sequential play obtains, with the low-quality firm taking the leader’s...

Conventionally, rent-seeking activities have been considered to deteriorate social welfare and to distort resource allocation. This paper examines whether rent-seeking behavior can improve social welfare by focusing on the welfare effects of firms’ competitive lobbying efforts when governments...

Switching costs are a key determinant of market performance. This paper tests their existence in the corporate loan market in which they are likely to play a central role because of the complexity of contracts and the relevance of informational problems. Using very detailed data at bank–firm...

An examination of the impact in the US and EU markets of two major innovations in the provision of air services on thin routes – regional jet technology and the low-cost business model – reveals significant differences. In the US, regional airlines monopolize a high proportion of thin...

This work presents an empirical analysis of the impact of user interaction on the demand for telecommunications. Specifically, we measure mobile telephony demand estimating a point-to-point model of the text messaging traffic exchanged cross-network, identifying the impact of incoming traffic as...

The conditions under which a government would initiate a fiscal incentive scheme to encourage the use of an eco-label in a duopoly are determined. The results reveal a scope for fiscal incentive provision in conjunction with the eco-label scheme for highly polluting industries.

In this paper we develop an empirical two-stage model of price competition for the banking industry that incorporates the choice of capacity in the form of new branches. This is achieved by supplementing the customary two-equation framework (demand plus first-order condition in the loan market)...

The market share for parallel imports when pharmacies can negotiate discounts with parallel traders and sellers of locally sourced products is analyzed both theoretically and empirically. The theoretical model shows that, with discount negotiations, pharmacies will sell locally sourced products...

This paper estimates the cost of using simple percentage fees rather than the broker optimal Bayesian mechanism, using data for real estate transactions in Boston in the mid-1990s. This counterfactual analysis shows that interme- diaries using the best percentage fee mechanisms with fees ranging...

Mechanisms according to which private intermediaries or governments charge transaction fees or indirect taxes are prevalent in practice. We consider a setup with multiple buyers and sellers and two-sided independent private information about valuations. We show that any weighted average of...