The nature of equilibrium in markets with adverse selection evoked considerable interest following George Akerlof's seminal article on the market for lemons. Akerlof argued that markets with adverse selection may yield no equilibrium. Charles Wilson has subsequently argued that multiple...

In a two-stage model of duopolistic capacity choice and subsequent price competition, consumer switching costs can deter some consumers from seeking service at a low-price firm that lacks sufficient capacity to serve the entire market. In this setting, firms' residual demand functions are...

We investigate a spatial duopoly in which the firms simultaneously select locations at the beginning of time; once chosen, the locations are fixed forever, but the firms will choose prices in each of a countably infinite succession of time periods. We are interested in equilibrium behavior when...

This article examines the incentives of contractual parties to design agreements that are left intentionally incomplete with regard to future duties or contingencies. More complete contracts mitigate ex post opportunism and the associated distortions in unobservable investment, but at the cost...

Shifting victorious plaintiffs' fees to defendants and increasing damage awards are alternative ways to achieve similar results: increasing plaintiffs' incentives to sue and raising defendants' expected payments. This article shows that relying on higher damage awards is more efficient than...

Anticipated postinnovation collusion encourages R&D effort, but realized collusion later yields deadweight losses. In balancing this tradeoff, Bertrand industries sometimes outperform Cournot; sometimes they do not. Both usually outperform perfectly collusive industries. The optimal level of...

This article seeks to evaluate the effects on corporate profitability of producing a major innovation. We examine two types of effect: innovations can have a direct but transitory effect on profitability associated with the production of a new product or the use of a new process, and innovations...

When there is asymmetric information, contingent fees can allow clients to signal the qualities of their cases and attorneys to signal the quality of their advice. Thus, a well-informed client who has a high-quality case will be willing to pay a relatively high fixed fee and a relatively low...

In a two-period differentiated products duopoly model, most-favored-customer (MFC) pricing policies allow firms to commit to prices above the Bertrand prices. It is shown here, however, that unless a restrictive and unappealing assumption is made about demand, there is no equilibrium in which...

The article is concerned with market behavior when firms have limited ability to handle effectively the complexity of changing market conditions and strategic interaction . Modelling the managerial bounded rationality by using the concept of strategic complexity as measured by a finite...