RAND Journal of Economics

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Contracting for information under imperfect commitment.
We study optimal contracting under imperfect commitment in a model with an uninformed principal and an informed agent. The principal can commit to pay the agent for his advice but retains decision-m . . .

Strategic judgment proofing.
A liquidity-constrained entrepreneur raises capital to finance a business activity that may harm bystanders. The entrepreneur raises senior (secured) debt to shield assets from the tort victims in b . . .

Entry and regulation: evidence from health care professions.
In many countries, pharmacies receive high regulated markups and are protected from competition through geographic entry restrictions. We develop an empirical entry model for pharmacies and physicia . . .

Communicating quality: a unified model of disclosure and signalling.
Firms communicate product quality to consumers through a variety of channels. Economic models of such communication take two alternative forms when quality is exogenous: (i) disclosure of quality th . . .

Production targets.
We analyze a dynamic model of quantity competition, where firms continuously adjust their quantity targets, but incur convex adjustment costs when they do so. Quantity targets serve as a partial com . . .

Bidding rings and the winner's curse.
This article extends the theory of legal cartels to affiliated private value and common value environments. We show that efficient collusion is always possible in private value environments, but may . . .

Price-increasing competition.
In a discrete choice model of product differentiation, the symmetric duopoly price may be lower than, equal to, or higher than the single-product monopoly price. Whereas the market share effect enco . . .

Specific knowledge and performance measurement.(Column)
I examine optimal incentives and performance measurement in a model where an agent has specific knowledge (in the sense of Jensen and Meckling) about the consequences of his actions for the principa . . .

Trade costs and multimarket collusion.
Contrary to conventional wisdom, this article argues that trade liberalization may facilitate collusion and reduce welfare. With the help of a duopoly model in which firms interact repeatedly in mul . . .

Entrepreneurs and new ideas.
We study how early-stage new ideas are turned into successful businesses. Even promising ideas can be unprofitable if they fail on one dimension, such as technical feasibility, correspondence to mar . . .

Academic freedom, private-sector focus, and the process of innovation.
We develop a model that clarifies the respective advantages and disadvantages of academic and private-sector research. Rather than relying on lack of appropriability or spillovers to generate a rati . . .

What changes energy consumption? Prices and public pressures.
Policymakers often seek to limit energy prices following market shocks, and instead issue public appeals to reduce demand. This article presents new evidence on how price changes and conservation ap . . .

Delegation and incentives.
This article analyzes the relation between authority and incentives. It extends the standard principal-agent model by a project selection stage in which the principal can either delegate the choice . . .

Illinois Walls: how barring indirect purchaser suits facilitates collusion.(Hanover Shoe Inc. v. United Shoe Machinery Corp.)(Il
In its landmark ruling in Illinois Brick Co. v. Illinois in 1977, the US. Supreme Court restricted standing to sue for recovery of antitrust damages to direct purchasers. However, antitrust damages . . .

Quantifying the benefits of entry into local phone service.(Company overview)
Local telecommunications competition was an important goal of the 1996 Telecommunications Act. We evaluate the consumer welfare effects of entry into residential local telephone service in New York . . .

An optimal auction with identity-dependent externalities.
We analyze the problem of a seller of multiple identical units of a good who faces a set of buyers with unit demands, private information, and identity-dependent externalities. We derive the seller' . . .

Differentiated networks: equilibrium and efficiency.
We consider a model of price competition in a duopoly with product differentiation and network effects. In the efficient allocation, both networks are active and the firm with the highest expected q . . .

Buy-out prices in auctions: seller competition and multi-unit demands.
Online auction sites often enable sellers to add a buy-out price. In one-shot auctions, this has been motivated by appeal to impatience or risk aversion. We offer additional justification in a dynam . . .

Do report cards tell consumers anything they don't already know? The case of Medicare HMOs.(Health Maintenance Organizations)
Estimated responses to report cards may reflect learning, about quality that would have occurred in their absence ("market-based learning,"). Using, panel data on Medicare HMOs, we examine the relat . . .

A retail benchmarking approach to efficient two-way access pricing: no termination-based price discrimination.
We study access pricing rules that determine the access prices between two networks as a linear function of marginal costs and (average) retail prices set by both networks. When firms compete in lin . . .

Takeovers, market monitoring, and international corporate governance.
We theoretically and empirically examine the role of international takeover markets in curtailing dominant shareholder moral hazard for firms with higher value-added from acquisitions. In equilibriu . . .

Domestic airline alliances and consumer welfare.
This article investigates the consumer welfare consequences of the recent code-share agreement between Continental Airlines and Northwest Airlines. We develop a discrete choice model based on indivi . . .

RAND journal of economics turnaround times.(Statistical table)
RAND Journal of Economics Turnaround Times First Decision (%) Month 0-3 4-6 7-9 Submitted Months Months Months July 2003 . . .

A theory of factor allocation and plant size.
This article develops a theory of how capital, skilled labor, and unskilled labor interact at the plant level. The theory has implications for the relationship between factor allocation and plant si . . .

Costly contracting in a long-term relationship.
We examine a model of contracting where parties interact repeatedly and can contract at any point in time, but writing formal contracts is costly. A contract can describe the external environment an . . .

Parallel imports and price controls.
Price controls create opportunities for international arbitrage. Man), have argued that such arbitrage, if tolerated, will undermine intellectual property rights and dull the incentives for investme . . .

Incentives and invention in universities.
We show that universities in the United States that provide stronger royalty incentives to faculty scientists generate greater license income, controlling for university characteristics. We use pre- . . .

Optimal rewards in contests.
We study all-pay contests with effort-dependent rewards under incomplete information. A contestant's value to winning depends not only on his type but also on the effort-dependent reward chosen by t . . .

Durable goods and conformity.
A consumer's demand for a durable good is governed not only by his individual preferences but also by preferences of other market participants. This interdependence of preferences arises from the in . . .

Sustaining implicit contracts when agents have career concerns: the role of information disclosure.
Firms often augment career concerns incentives with implicit incentive contracts. I formalize the interaction between these two incentives, and highlight its implications on a firm's decision to dis . . .

Information feedback in first price auctions.
I apply the notion of a self-confirming equilibrium (SCE) to study how feedback in first price auctions influences bidders' perceptions about their strategic environment, and consequently their bidd . . .

Durable goods and residential demand for energy and water: evidence from a field trial.
This article describes a household production model in which energy-efficient durable goods cost less to operate so households may use them more. The model is estimated using household-level data fr . . .

Search with learning: understanding asymmetric price adjustments.
In many retail markets, prices rise faster than they fall. We develop a model of search with learning to explain this phenomenon of asymmetric price adjustments. By extending our static game analysi . . .

Work-related perks, agency problems, and optimal incentive contracts.
Work-related perks, such as corporate jets, nice offices, and so forth, improve the tradeoff between incentives and insurance that determines the optimal incentive contract. We show that (i) such pe . . .

Short-term fluctuations in hospital demand: implications for admission, discharge, and discriminatory behavior.
We analyze admission and discharge decisions when hospitals become capacity constrained on high-demand days, and develop a test for discrimination that, under certain circumstances, does not require . . .

Laboratory evidence on the effectiveness of corporate leniency programs.
The number of cartels detected in the United States and in Europe has increased considerably since the introduction of corporate leniency programs in antitrust legislation. It cannot, however, be ru . . .

Imperfect durability and the Coase conjecture.
This article considers a market served by a monopolist who sells a durable good that depreciates stochastically over time. We show that there exist three types of stationary equilibria: a Coase Conj . . .

Rules of proof, courts, and incentives.
We analyze the design of legal principles and procedures for court decision making in civil litigation. The objective is the provision of incentives for potential tort-feasors to exert care when evi . . .

Industry dynamics with stochastic demand.
We study the dynamics of an industry subject to aggregate demand shocks where the productivity of a firm's technology evolves stochastically over time. To characterize the intertemporal evolution of . . .

Properties of scoring auctions.
This article studies scoring auctions, a procedure commonly used to buy differentiated products: suppliers submit offers on all dimensions of the good (price, level of nonmonetary attributes), and t . . .

Understanding strategic bidding in multi-unit auctions: a case study of the Texas electricity spot market.(Case study)
We examine the bidding behavior of firms in the Texas electricity spot market, where bidders submit hourly supply schedules to sell power. We characterize an equilibrium model of bidding and use det . . .

Retailers' choice of product variety and exclusive dealing under asymmetric information.
This article considers vertical relations between an upstream manufacturer and a downstream retailer that can independently obtain a low-quality, discount substitute. The analysis reveals that under . . .

Can cost increases increase competition? Asymmetric information and equilibrium prices.
We present an analysis of competition under asymmetric information where prices react asymmetrically to changes in firms" marginal costs. When one firm has private information about some customers, . . .

Imperfect competition and quality signalling.
We examine the interplay of imperfect competition and incomplete information in the context of price competition among firms producing horizontally and vertically differentiated substitute products. . . .

Efficient partnership dissolution under buy-sell clauses.
Buy-sell clauses are commonly used contractual provisions to determine the terms of dissolution of partnerships. Under them, one party offers a price for the partnership and the other party chooses . . .

Single sourcing versus multiple sourcing.
We show that in contrast to results in the extant literature, single sourcing may not be the optimal strategy of a buyer facing suppliers with strictly convex costs. As we argue, previous findings r . . .

Market forces meet behavioral biases: cost misallocation and irrational pricing.
Psychological and experimental evidence, as well as a wealth of anecdotal examples, suggests that firms may confound fixed, sunk, and variable costs, leading to distorted pricing decisions. This art . . .

The value of information and optimal organization.
The article addresses the issue of optimal organization of production. I compare three organizational forms: centralization (one agent produces different inputs), decentralization (each of two agent . . .

Information and bargaining in the hold-up problem.
This article incorporates an information structure with partial information into the canonical hold-up problem. The optimal information structure balances the tradeoff between ex ante efficiency (th . . .

Optimal choice of characteristics for a nonexcludable good.
In this model, a principal decides whether to produce one indivisible good and which characteristics it contains. Agents are differentiated along two substitutable dimensions: a vertical parameter t . . .