The introduction of a new product generation forces incumbents in network industries to rebuild their installed base to maintain an advantage over potential entrants. We study if backward compatibility can help moderate this process of rebuilding an installed base. Using a structural model of...

We analyze the emergence and spatial evolution of the German laser systems industry. Regional knowledge in the related field of laser sources, as well as the presence of universities with physics or engineering departments, is conducive to the emergence of laser systems suppliers. The regional...

We analyze the effects of accidents and liability obligations on the incentives of car manufacturers to monopolize the markets for their spare parts. We show that monopolized markets for spare parts lead to inefficiently high prices for spare parts. Furthermore, monopolization induces the...

In today’s globalised world of instant communication, mobile phones are a nearly ubiquitous feature of everyday life in most developed and many developing countries. Ninety percent of the population of Western Europe now has access to a mobile phone, and mobile phone penetration in large Asian...

Moral hazard exists in diagnosis-cure' markets because sellers have an incentive toquot; shade their reports of buyers' condition to increase the short-run demand for the treatments theyquot; supply. The California vehicle emission inspection market offers a rare opportunity to examinequot; how...

Product standards can have a dual impact on costs and, thus, on trade. They can impose costs on exporters as it may be necessary to adapt products for specific markets (cost effect). In contrast, standards can reduce exporters' information costs as they convey information on product...