We analyze several aspects of the debate on insider trading regulations. Critics of such regulations cite various benefits of insider trading. One prominent argument is that insider trading leads to more informationally efficient stock prices. We show that under certain circumstances, insider...

We explore the response of collusive prices to changing demand conditions when firms operate under capacity constraints in the presence of demand uncertainty. We find support for the conventional view that periods of low demand lead, through the emergence of excess capacity, to a breakdown of...

While recent studies of deregulated airline prices considerably advance our understanding of competitive structure in this industry, they suffer from several weaknesses that could potentially undermine their inferences. In this article, we consider an alternative approach to this issue that uses...

We present a new theory of pervasive shortages under socialism, based on the assumption that the planners are self-interested. Because the planners -- meaning bureaucrats in the ministries and managers of firms -- cannot keep the official profits that firms earn, it is in their interest to...

This article provides the first evidence linking airfares to the structure of airline hub-and-spoke networks. The hypothesis tested is that any force that increases traffic volume on the spokes of a network will reduce fares in the markets it serves. This effect arises because of economies of...

Two rival firms must decide if and when to adopt a new technology, knowing how adoption costs decline over time and how profit flows vary with adoption patterns. In many cases, price and entry regulations beneficially slow technology adoption by making preemption strategies less attractive. In...

We examine profit-maximizing nonlinear pricing under a stylized version of the FCC's price-cap plan for AT&T, whereby the firm's average revenue in each period is constrained not to exceed some fixed level. When average revenue in each period is calculated as the ratio of total revenue in that...

The traditional literature on method of pay distinguishes workers who are paid time rates from those who are paid piece rates. The theory predicts that the piece-rate workers will earn more, and empirically they do. A simple generalization is to divide time-rate workers into two groups: those...

It is widely believed that a supplier who distributes her product through retailers can achieve the vertically integrated outcome with nonlinear contracts, provided the retail price is the only target of control and there is no uncertainty. We show that this result fails when retailers cannot...