We investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information. We find that, if the decisionmaker is strategically sophisticated and well informed about the relevant...

Previous articles have noted the possibility of socially inefficient levels of entry in markets in which firms must incur fixed set-up costs upon entry. This article identifies the fundamental and intuitive forces that lie behind these entry biases. If an entrant causes incumbent firms to reduce...

Policy debates over energy pricing frequently pit "producing states" against "consuming states." Such a distinction ignores the fact that ownership of energy-producing and energy-using assets is geographically dispersed, and that trade links regional economies. Incorporating these factors as...

We construct a model of long-term bilateral competition between the supplier of an exhaustible resource and a consuming country capable of producing a perfect substitute for the resource. The technology for producing the substitute is known, and the strategy of the consuming country is to choose...

This article models the process of bidding for government contracts in the presence of moral hazard. Several (possibly risk-averse) potential contractors (agents) submit sealed bids, on the basis of which the government (principal) selects one to perform a task. The optimal linear contract is...

Under what circumstances will firms agree on the choice of roles of leader and follower in the von Stackelberg duopoly model? A key determinant is the slope of the firms' reaction function (in either price or quantity space). The duopolists will disagree over the choice of roles if they have...

This article shows that the diffusion of a capital-embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions. Strategic behavior is inessential to this finding. We develop a method for comparing diffusion rates for different...

We analyze the effects of a "winner-take-all" patent mechanism on the riskiness of the research strategies chosen by competing firms, as well as on the firms' incentives to duplicate research projects. Nash equilibrium choices are compared with the social optimum in a one-shot, simultaneous-move...

We study the optimal pattern of outlays for a single firm pursuing an R&D program over time. In the deterministic case (a) the amount of progress required to complete the project is known and (b) the relationship between outlays and progress is known. In this case it is optimal to increase...

The systematic cost overruns occurring in large-scale, long-term projects are rationalized as the outcome of the bilateral relationship between the sponsor and contractor in which neither party can credibly commit himself to a course of action over time. We model this long-term relationship as a...