This article analyzes R&D policies when the returns to cost-reducing and demand-creating R&D are imperfectly appropriable and market structure is endogenous. We generalize previous characterizations of appropriability to permit the possibility that own and rival R&D are imperfect substitutes. We...

This article develops a model of the takeover bidding process. The model can be described as a form of auction in which a bidder can acquire costly information after the bidding has begun. Implications concerning the interrelationships between bidders' and targets' profits, bidders' initial...

This article is concerned with explaining the observed positive relationship in a cross section of industries between technical advance and R&D intensity. It presents a set of models to explore how technological opportunity and appropriability affect both of these variables. The models suggest...

This article constructs a model of R&D with heterogeneous firms. Each firm's probability of success is a function of its sunk and recurrent R&D expenditures. The social gains from an innovation are not fully captured by the successful firm. The comparison of the social optimum and the market...

Book review

According to prevailing theory, firms diversify in response to excess capacity of factors that are subject to market failure. By probing into the heterogeneity of these factors, we develop the corollary that firms that elect to diversify most widely should expect the lowest average rents. An...

We analyze a duopoly in which firms acquire inputs through bilateral monopoly relations with suppliers. We combine a bargaining model with a duopoly model to examine how input prices and profits are affected by the structures of the upstream and downstream industries, by the demand relations...

In this article we analyze an informed firm's choice of financial structure when the financing contract is observed not only by the capital market but also by a second uninformed party, such as a competing firm. The informed firm's gross profit is endogenous, because the second party's action...

This article analyzes the effect of product-market competition on managerial incentives. In contrast to Hart (1983a), I show that competition may actually exacerbate the incentive problem. The difference in results derives from our different assumptions about managerial preferences. The...

This article analyzes the effect of a firm's capital structure on its product market strategy in the context of a model of repeated oligopoly. I show that there exists an upper bound on the firm's debt level in the absence of bankruptcy costs. This bound depends on the number of firms in the...