A Regulatory Adjustment Process for Optimal Pricing by Multiproduct Monopoly Firms

Signaling advertising by multiproduct firms

We consider the use of advertising expenses as quality signals in multiproduct firms, extending previous results on single product firms. In our model a firm introduces sequentially two products whose qualities are positively correlated. We investigate whether there exist information spillovers from the first to the second market. We show that, when correlation is high, the equilibrium in marke...

Buyer-Optimal Demand and Monopoly Pricing∗

This paper analyzes a bilateral trade model where the buyer can choose any cumulative distribution function (CDF) supported on [0, 1], which then determines her valuation. The seller, after observing the buyer’s choice of the CDF but not its realization, gives a takeit-or-leave-it offer to the buyer. We characterize the unique equilibrium outcome of this game and show that in this outcome, the ...

Buyer-Optimal Learning and Monopoly Pricing∗

This paper analyzes a bilateral trade model where the buyer’s valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-orleave-it offer to the buyer. Our goal is to characterize those signal structures which maximize the buyer’s expected payoff. We identify a buyer-optimal signal structure which generates (i) effi cient trade and (ii) ...

Multiproduct Firms, Information, and Loyalty * Multiproduct Firms, Information, and Loyalty

This study provides evidence that the portfolio of products offered by a multiproduct firm affects consumer purchase decisions with respect to each of its products. We present a theory that explains this empirical regularity. The theory involves revising the information set of consumers to include the profile of multiproduct firms. We show that revising the information set in this way introduce...

Socially optimal liability rules for firms with natural monopoly