Recent work by Rotemberg and Saloner (1986) investigates the effect of the business cycle on optimal collusive pricing by specifying that demand is subject to i.i.d. shocks. An implication of the i.i.d. assumption is that firms' expectations on future demand are unrelated to the current level of...

Producers in a perfectly competitive industry compete to obtain shelf space at the retail level. Barring contract observability problems, slotting allowances are observed in equilibrium. Producers charge a high wholesale price, but they give back their profits via up-front payments to retailers....

A number of authors have recently considered whether the free rider problem is exhibited in models characterized by multiple potential entrants/sequential entry. Bernheim (1984) and Eaton and Ware (1987) find that the free rider problem is not an important factor, while McLean and Riordan (1989)...

We expand Milgrom and Roberts' (1982) limit pricing model to allow for multiple incumbents. Each incumbent is informed as to the level of an industry cost parameter and selects a preentry price while a single entrant observes each incumbent's preentry price. We find that incumbents are unable to...

I investigate the consequences of imposing a minimum quality standard on an industry in which firms face quality-dependent fixes costs and compete in quality and price. Even though the high-quality sellers would satisfy the standard in the absence of regulation, imposing a standard leads these...

Legal penalties and liability insurance seem to have counteracting effects on the incentives of a potential injurer to take due care. However, if legal penalties are set efficiently and implemented perfectly, unrestricted access to insurance can be optimal. In contrast, if the standards of guilt...

This article offers a new explanation of the dividend puzzle, based upon a model in which firms signal profitability by distributing cash to shareholders. I assume that dividends and repurchases are identical, except that dividends are taxed more heavily. Nevertheless, I demonstrate that under...

A firm may leave an industry in at least three ways: through merger, voluntary liquidation, or bankruptcy. There are important economic differences between forms of exit, yet previous work has treated exits as homogeneous. This article develops a model of the relation between the forms of exit...

Consider a setting commonly found in intrafirm, regulatory, and political relationships wherein an uninformed decision maker, attempting to elicit information from an informed party affected by his decision, is unable to use transfers. This article examines whether both parties will agree on the...

This article examines how the threat of entry constrains pricing behavior in a natural monopoly with briefly sunk costs. In the model of dynamic price competition explored here, costs are too briefly sunk to confer any strategic advantage to incumbency. Despite the lack of advantage to...