Impose Assumption 1 and assume there exists a β ∈ B with βΓ(v) > v. The semi-separating equilibrium is characterized by a discount factor for the marginal buyer, β̂ ∈ B, which is determined in equation (A1) below. For now, fix β̂ and assume, as we verify below, that β̂Γ(v) > v. We next define two critical prices. The lowest price with trade is p ≡ β̂Γ(v), the value that the marginal buyer places on...

A buyer-seller watermarking protocol deters dishonest buyers from illegally distributing bought content. This is achieved by giving the seller the capability to trace and identify these buyers, while also allowing the seller to prove illegal acts to a third party. At the same time, an honest buyer is prevented from being falsely accused of illegal content distribution by the seller. Many protoc...

A “conservation good” (such as a tropical forest) is owned by a seller who is tempted to consume (or cut), but a buyer benefits more from conservation. The seller does conserve if the buyer is expected to buy, but the buyer is unwilling to pay as long as the seller conserves. This contradiction implies that the market for conservation cannot be efficient and conservation is likely to fail. A le...

We consider homogeneous two-sided markets, in which connected buyer-seller pairs bargain and trade repeatedly. In this infinite market game with exogenous matching probabilities and a common discount factor, we prove the existence of equilibria in stationary strategies. The equilibrium payoffs are given implicitly as a solution to a system of linear equations. Then, we endogenize the matching m...

We develop a dynamic pricing model of experience good between one seller and one buyer. The buyer can learn about how the product fits him by consumption. We characterize a class of equilibria in which the seller o↵ers low price to induce learning in the earlier period, followed by high price to extract the consequence of learning in the later period. Moreover, we show that shorter contract dur...