We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price-matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overa...

I study price competition in settings where end products are combinations of components supplied by different monopolists, nesting standard models of perfect complements and imperfect substitutes. I show sufficient conditions for a discrete-choice demand system to yield demand for each product which is logconcave in price, and has log-increasing differences in own and another product’s price, l...

The spokes model is a recent framework to study n-firms spatial competition. In a spatial framework firms delivering their product can price discriminate with respect to consumers’ location. Conditions for the existence of a price-location equilibrium of the spokes model with delivered product are established in both the case where there are as many firms as spokes and in the case not all spoke...

We introduce a model of a cyclic game. Designed to take advantage of the recurring nature of certain economic and social situations, a cyclic game differs from an extensive form game in that a cyclic game does not necessarily have an end. The same situations, although with different players, may be repeated infinitely often. We provide an example showing that, even though a cyclic game has, in ...

A dynamic approach is proposed for the analysis of the Cournot oligopoly game with hyperbolic demand, showing that the adoption of capital accumulation dynamics either à la Solow-Swan or à la Ramsey eliminate the indeterminacy problem characterising the static model when marginal costs are nil. It is proved that the steady state equilibria produced by both models are stable in the saddle point ...

Regulatory reform in the Nordic electricity-supply markets has resulted in a single integrated Nordic electricity market. This paper performs an econometric study of market power in the spot market of Nord Pool, the joint Nordic power exchange. I use a dynamic extension of the Bresnahan-Lau model, and weekly data for the period from 1996 through April 1999. To my knowledge, this is the first st...

Exclusive Quality – Why Exclusive Distribution May Benefit the TV Viewers* Sports organizations, Hollywood studios and TV channels grant satellite and cable networks exclusive rights to televise their matches, movies and media contents. Exclusive distribution prevents viewers from watching attractive programs, and reduces the TV-distributors incentives to compete in prices. This paper demonstra...

We propose an alternative market design to the current credit ratings industrial organization. An issuer delegates a pass-through non-monitoring trust to acquire ratings from credit ratings agencies (CRAs). The trust pays outcome contingent fees, such that truth-telling is incentive compatible for CRAs, eliminating ratings inflation. Moreover, because the trust acts as an intermediary, it elimi...

It has been suggested that mergers, by increasing concentration, raise incentives to invest and hence are pro-competitive. To study the effects of mergers, we rewrite a game with simultaneous price and cost-reducing investment choices as one where firms only choose prices, and make use of aggregative game theory. We find no support for that claim: absent efficiency gains, the merger lowers tota...

There are large deviations in access to telecommunications infrastructure and trading patterns within the East Asian region. We examine how the network externalities of communication activities and trading opportunities interact to determine the structure of comparative advantage. These interactions are examined by constructing a simple two-country, two-good model of trade involving a country-s...