We develop a spatial model in which consumers receive firm-specific location shocks and firms endogenously determine both franchise/product locations and prices. Remarkably, firms fail to profit from endogenous product-specific heterogeneity alone: while ex-post consumer heterogeneity ensures positive gross profits, competition for market share results in socially-excessive product lines and ze...

We measure the importance of risk within a firm that pays its workers piece rates, exploiting data from payroll records and a series of field experiments conducted within the firm. These data are used to identify and estimate worker preferences, abilities and risk exposure. These estimates are combined to measure the workers’ cost of risk: their willingness to pay to avoid risky contracts. We f...

• Verizon and AT&T earn substantial scarcity rents from holding nearly all of the original low-frequency Cellular licenses, which gives them operational and quality advantages reflected in their prices and profits. • The 700 MHz spectrum has high " foreclosure value " to Verizon and AT&T, separate from the true " economic value " of building and operating a network. Market entry by new 700 MHz ...

Avastin, a widely used colon cancer drug manufactured by San Francisco-based biotech company Genentech, has proven a somewhat effective treatment for lung and breast cancer when administered at twice the normal dose. In February, the New York Times carried a story about Avastin's extraordinarily high price when used in this alternative way: $100,000 for one year's treatment--a figure fully twic...

There is an ongoing debate about the credit card industry regarding how effective competition has been at reducing prices. Some experts argue that intense competition is clearly evident and leads to low prices that contain no excess profit. However, other experts find evidence both in price data and in market concentration that competition has failed. A model is presented here showing that if t...