We derive the optimal crowdfunding contract of a financially constrained monopolist and analyze its implications for production, investment and welfare. Crowdfunding contracts may serve as a price-discrimination mechanism, forcing pivotal consumers to pay a premium above the future spot price, thus increasing profits. When raising funds is costly, entrepreneurs balance the benefits from price d...

Government-sponsored auctions for production rights (e.g., license auctions, privatizations, etc.) shape the industry structure. Are there mechanisms that induce an efficient industry structure (at least when there are no positive costs to public funds)? The answer is “no” whenever firms have private information about both fixed and marginal costs. Our analysis also suggests that the second-bes...

Rothschild and Stiglitz (1976) demonstrated that adverse selection may entail nonexistence of equilibrium in competitive insurance markets. We approach this problem in a dynamic model with boundedly rational insurance rms. Firms' behavior is based on imitation of pro t making contracts, withdrawal of loss making contracts, and experimentation with random contracts. Consumers choose in each peri...

This paper develops a theory of putty-clay investment under factor price uncertainty using a Brownian motion framework. Ex ante the 4rm faces a choice of technologies that di5er by their relative factor intensities, but ex post technologies are Leontief. The presence of competing technologies and factor price uncertainty can cause delay of pro4table investments for a monopolist 4rm facing a one...

The effects of information on market design are explored in a simple setting where firms have private information about their correlated fixed costs and the government aims to maximize its expected revenue conditional on achieving efficient allocations. Government revenues are higher when the costs are less correlated (or are more of a private value). The reduced correlation increases the firms...

The presence of a vertical externality, and therefore an incentive to integrate or to impose vertical restraints, is investigated in 11 posted-offer experiments. Upstream markets are characterized by a single seller. When the downstream market consists of three firms, there is no evidence of a vertical externality, and behavior is consistent with the vertically integrated outcome. With a single...

In this paper, we analyze the interaction between an incumbent rm's nancial contract with a bank and its product market decisions in the face of the threat of entry, in a dynamic model. The main results of the paper are: there exists a separating equilibrium with no limit pricing; the low-cost incumbent repays more to the bank in the rst period, due to the threat of entry; and there are paramet...

Agricultural research drives increases in agricultural productivity, and the number of private agricultural input firms has been declining. The empirical relationship between the number of firms doing applied biotechnology crop research and the amount of research output they produce is investigated in a research profit function model. Increases in seed industry concentration have reduced biotec...

This paper examines whether it makes sense to consider Sutton’s “bounds” approach as a candidate theory for explaining the recent evolution of market structure in the biotechnology sector, and to speculate whether market structure will change if the industry begins to introduce second-generation GM products that are of more direct benefit to consumers. A key result is that the market structure ...

Estimates from a structural model of consumer behavior and firm conduct are used to decompose the extent to which quantity discounts for paper towels are consistent with second degree price discrimination as opposed to cost differences across sizes. Counterfactual exercises assuming that firms offer only one package size or charge uniform prices across sizes indicate that competition in the mul...