The Ghemawat and Nalebuff (1985) exit model is extended to include an entry stage. Demand is high at the time of entry but is expected to eventually decline. It is shown that equilibrium entry decisions may be critically affected by the prospect of a future decline in demand, even when the...

This article presents empirical evidence concerning the value of franchise bidding competition as a means of controlling natural monopoly behavior. The analysis focuses on the cable television industry, using data collected in a survey of local government officials in cabled communities...

I examine a model of optimum enforcement in which offenders can engage in activities that reduce the probability of being caught and fined. The costs associated with these avoidance activities imply that it is not necessarily optimal to set fines for offenses as high as possible. These avoidance...

This article reports the results from laboratory markets using a new trading institution in which sellers post offers to sell flows of output in real time. We use the new institution to examine the outcomes in natural monopoly experimental markets. No. stable price outcomes were observed in...

The stringency of the novelty requirement in patent law affects the pace of innovation because it affects the amount of technical information that is disclosed among firms. It also affects ex ante profitability of research. We compare weak and strong novelty requirements from the standpoint of...

In this article we quantify the costs of pollution controls by reporting the results of simulations of the growth of the U.S. economy with and without regulation. For this purpose, we have constructed a detailed model of the economy that includes the determinants of long-term growth. We have...

In past experiments, committees voting under majority rule have often failed to choose the Condorcet alternative (the core). Since this failure of theory might be due to flaws in experimental design, we developed a voting procedure in which the unique element in the core is also the unique...

This article examines the effects of information on consumer and producer behavior by focusing on the ready-to-eat cereal market during a period in which information developed about the health benefits of fiber cereal consumption. Although cereal producers were initially prohibited from...

Models of (horizontal) product differentiation generally admit many equilibria. These include concentrated equilibria, in which few firms each offer many products, and fragmented equilibria, in which many firms each offer one product. Since these outcomes depend in a delicate way on features of...

This article investigates the effect of firm size and ownership structure on technology adoption decisions using data on the electric utility industry. We argue that traditional models of technology diffusion may be subject to sample selectivity biases that overstate the effect of firm size on...