We set up a duopoly model with dynamic capacity constraints under demand uncertainty. We endogenize the investment decisions of the ?rms, examine their intertemporal pricing behavior, their incentives to merge, as well as the welfare implications of a merger. Whereas under known and constant...

Recent changes in telecommunications markets raise the issue of how price restrictions across markets impact strategic entry and pricing decisions. The Telecommunications Act of 1996 opens all telecommunications markets to competition and contains a provision for universal service, requiring...

We examine oligopolistic markets with both intrabrand and interbrand competition. We characterize equilibrium contracts involving a royalty (or wholesale price) and a fee when each upstream firm contracts with multiple downstream firms. Royalties control competition between own downstream firms...

We analyze a simple dynamic durable good model. Two incumbent sellers and potential entrants choose their capacities at the start of the game. We solve for equilibrium capacity choices and the (necessarily mixed) pricing strategies. In equilibrium, the buyer splits the order with positive...

In several interesting markets, demand is an increasing function of past sales, because of learning, network externalities, or "fashion." This paper examines entry into such markets where demand is initially unknown to the firms but grows endogenously over time. The capacity expansion paths of...

A two-part tariff is a pricing scheme according to which the buyer pays to the seller a fixed fee and a constant charge for each unit purchased. When it is used, the average price paid decreases as more units are purchased. Further, it is the marginal charge and not the fixed fee that determines...

We analyze a simple dynamic durable good oligopoly model where sellers are capacity constrained. Two incumbent sellers and potential entrants choose their capacities at the start of the game. We solve for equilibrium capacity choices and the (necessarily mixed) pricing strategies. In...

We examine a horizontal product differentiation duopoly model where firms are also differentiated with respect to the quality of their products. Firms first choose their locations and then compete in prices. It is shown that, whereas the low quality firm prefers to locate as far as possible from...