We enrich Milgrom and Roberts' (1982) limit-pricing model to allow an incumbent to signal his costs with both price and advertisements. Our fundamental result is that a cost-reducing distortion occurs, in that the incumbent behaves as if there were complete information but his costs were lower...

In this article I illustrate the impact of trade unions on strategic product market behavior. I discuss entry deterrence through capital durability in a model developed by Eaton and Lipsey. In the presence of unions, sunk capital scares away potential entrants but can also raise workers'...

Regulation has economic and political dimensions, both of which I endogenize in this hierarchical model in which a legislature chooses by majority rule the mandate of an agency that faithfully regulates a firm with private information about its costs. Sufficient conditions are given for an...

I present a signalling model in which a multiproduct firm can use its reputation as a bond for quality by using a brand name for an established product when it introduces a new experience good. As out-of-equilibrium beliefs are specified, a false signal may be taken to imply that both the...

Past studies of takeover regulations have found that such rules increase the premiums paid to the shareholders of successfully acquired targets. Jarrell and Bradley argue that these higher premiums harm shareholders by discouraging takeover activity and protecting inefficient managers. Bebchuk...

We identify factors that lead to changes among corporate directors. We hypothesize that the CEO succession process and firm performance will affect board composition. Our findings are consistent with both hypotheses. When their CEO nears retirement, firms tend to add inside directors (who may be...

It is by now well known that, in the presence of moral hazard or adverse selection, randomization of insurance premiums and benefits may be Pareto efficient. This article provides a typology of the various forms that randomization may take, derives necessary or sufficient conditions for the...

I develop a model of firm diversification into multiple product lines that is based on the agency problem between the firm's managers and owners. The agency relationship, together with a span-of-control managerial technology, determines an optimal firm size and degree of diversification that are...

In this article I investigate three single-shot models of differentiated-products oligopoly. In each model firms choose both output and price. The demand, cost, and spillover demand specifications are quite general, and there are three main results. First, with simultaneous choice there is no...

We consider a professional sports league's use of a well-defined incentive mechanism, revenue sharing, to encourage the desired behavior of teams in the league. The incentive mechanism works by internalizing externalities that arise across agents (the team owners). We find revenue sharing to be...