This paper analyzes a bilateral trade problem where the seller makes hidden investment that influences the buyer's private valuation. Complete contracts can be written on observable trade decisions. It is shown that efficiency level in investment and trade is negatively related to the scope of...

This paper looks at the inter-temporal price discrimination game that arises when a monopolist faces naïve-time-inconsistent consumers. En route to solving this game, we introduce two new solution concepts for dynamic games where some players are time inconsistent. The first solution concept is...

This paper studies an internet trading mechanism similar to the one described in Peters and Severinov (2001) in a market where traders values are interdependent. It is shown that under reasonable conditions this mechanism has a perfect Bayesian equilibrium which supports allocations that...

Specialist merchants and traders---agents who mediate the transfer of goods and services between producers and consumers---are central to the economic process, but there are few theoretical models in which the institution of intermediation is an endogenous part of an equilibrium. This paper...

We propose a new location model where consumers are allowed to make multiple purchases (i.e., one unit from each firm). This model fits many markets (e.g. newspapers, credit cards, scholarly journals, subscriptions to TV channels, etc.) better than existing models. A common feature of these...

This paper studies a competitive market model for trading indivisible commodities. Commodities can be desirable or undesirable. Agents' preferences depend on the bundle of commodities and the quantity of money they hold. We assume that agents have quasi-linear utilities in money. Using the...

In this paper, we study the incumbent's incentive to share its essential facility when there exist network effects. We show that without network effects, the incumbent will charge an access fee high enough to deter the entry. with network effects, however, the incumbent always has an incentive...