I uncover a new force towards increasing dominance (the property whereby, in dynamic games, the leader tends to increase her lead in expected terms). The new effect results from the strategic choice of covariance in races. I assume that players must choose not the amount of resources to spend...

I analyze the effects of a merger between two firms in a differentiated-goods duopoly. I make the crucial assumption that the industry is at a free-entry equilibrium both before and after the merger. In particular, I allow for the possibility of entry subsequent to the merger. Not surprisingly,...

I examine the dynamics of oligopolies when fi rms derive subjective value from being the market leader. In equilibrium, prices alternate in tandem between high levels and occasional price wars, which take place when market shares are similar and market leadership is at stake. The stationary...

Taking the early U.S. automobile industry as an example, we evaluate four competing hypotheses on regional industry agglomeration: intra-industry local externalities,inter-industry local externalities, employee spinouts, and location fixed-effects. Our findings suggest that spillovers from the...

We consider the formation of alliances that potentially create complementarities, that is, when the value function is super-modular in firm resources. We show that, in a frictionless world where information is perfect and managers optimize, firm alliances disproportionately increase the value of...

Many new web-based services are introduced as free services. Depending on the seller's business model, some remain free in the long run, while others switch to pay mode at some point in time. I characterize the relation between buyers and a new service seller when the former are uncertain about...

Taking the early U.S. automobile industry as an example, we evaluate four competing hypotheses on regional industry agglomeration: intra-industry local externalities, inter-industry local externalities, employee spinouts, and location fixed-effects. Our findings suggest that inter-industry...

Critics of Microsoft and Google's dominance claim these companies are nothing but "giants standing on the shoulders of babies," whose dominance destroys the incentives for entrants to innovate. By contrast, pro-Microsoft and pro-Google analysts stress the benefits of large, innovative firms. We...