We demonstrate that demand uncertainty alone can lead to equilibrium product variety. We consider a simple environment in which when demand is certain, a social planner, a competitive market, and a monopolist would all offer a single product, but when demand is uncertain, a social planner, a...

We show that demand uncertainty leads to vertical product differentiation even when consumers are homogeneous. When a firm anticipates that its inventory or capacity may not be fully utilized, product variety can reduce its expected costs of excess capacity. When the firm offers a continuum of...

Buyer cooperatives, buyer alliances, and horizontal mergers are often perceived as attempts to increase buyer power. Most theoretical and empirical work on buyer groups has emphasized that buyer size can increase buyer surplus. In contrast, I argue that even an arbitrarily small buyer group that...

By bundling experience goods, a manufacturer can more easily maintain a reputation for high quality over time. Formally, we extend Klein and Lefler's (1981) repeated moral hazard model of product quality to consider multi-product firms and imperfect private learning by consumers. When consumers...

This paper develops an oligopoly model in which firms first choose capacity and then compete in prices in a series of advance-purchase markets. We show that when the elasticity of demand falls across periods, strong competitive forces prevent firms from utilizing intertemporal price...