In this article, we construct a model to study competing payment networks, where networks offer differentiated products in terms of benefits to consumers and merchants. We study market equilibria for a variety of market structures: duopolistic competition and cartel, symmetric and asymmetric networks, and alternative assumptions about consumer preferences. We find that competition unambiguously...

The choice between quantity and price in order to stabilize collusion is modeled here. It is shown that this relocates the prisoners’ dilemma backwards, from the market stage to the stage where the market variable is chosen in order to sustain collusion, and where discount rates appear as the payo¤s. Likewise, a prisoners’ dilemma arises also when both the market variable and the type of behavi...

The large and growing industry of price comparison websites (PCWs) or ‘web aggregators’ is poised to benefit consumers by increasing competitive pricing pressure on firms acquainting shoppers with more prices. However, these sites also charge for sales, which feeds back raise I investigate the impact introducing PCWs a market homogeneous good. find that single PCW increases prices all consumers...

This paper studies competitive allocations under adverse selection. We first provide a general necessary and sufficient condition for entry on an inactive market to be unprofitable. then use this result characterize, active market, unique budget-balanced allocation implemented by tariff making additional trades with entrant Motivated the recursive structure of allocation, we finally show that i...

We derive a measure of firm speed of price adjustment that is directly inversely related to market power and compare this to the measure derived by Martin (1993). However, both measures are incorrect when firms have non-zero price conjectural variations and treat competing price levels as exogenous. This is because Taylor series expansions of the demand function implicitly assume that firms inf...

This entry shows why self-interested agents manage to cooperate in a long-term relationship. When agents interact only once, they often have an incentive to deviate from cooperation. In a repeated interaction, however, any mutually beneficial outcome can be sustained in an equilibrium. This fact, known as the folk theorem, is explained under various information structures. This entry also compa...

We show that in large …nite economies, core allocations can be approximately decentralized as Nash (rather than Walras) equilibrium. We argue that this exercise is an essential complement to asymptotic core equivalence results, because it implies that in some approximate sense individual attempts to manipulate the decentralizing prices cannot be bene…cial, which …ts precisely the interpretation...

This paper studies a model of product variety with flexible manufacturers when, contrary to prior work, atomistic entry occurs prior to horizontal integration. In this model, more lax antitrust laws that allow for fewer and more concentrated merged firms lead to a greater extent of excess entry. Optimal policy permits no horizontal mergers when demand is perfectly inelastic, but may permit some...

This paper studies competition between firms when consumers observe a private signal of their preferences over products. Within the class structures that induce pure-strategy pricing equilibria, we derive are optimal for and those consumers. The firm-optimal policy amplifies underlying product differentiation, thereby relaxing competition, while ensuring purchase preferred product, maximizing t...