In this paper, we study how rational agents infer the quality of a good (a product or a service) by observing the queue that is formed by other rational agents to obtain the good. Agents also observe privately the realization of a signal that is imperfectly correlated with the true quality of...

Firms sometimes nurture long lines, rather than raising prices to eliminate waiting times. We justify this practice by considering the informational role of a queue in a setting in which a firm can also adjust its price to signal its quality to uninformed consumers. When the proportion of...

We consider a firm’s choice of service rate in the following environment. The firm may have high or low quality, and sells a good to consumers who are heterogeneously informed. Consumers arrive according to a Poisson process and are serviced in a random period of time. If a consumer arrives...

We find new facts that relate the evolution of firm scope to the changing frictions in external capital markets over the last three decades. We find that large, diversified publicly traded firms increase their scope during times of high external capital market frictions, such as in the recent...

When external capital markets are stressed they may not reallocate resources between firms. We show that resource allocation within firms' internal capital markets provides an important force countervailing financial market dislocation. Using data on U.S. conglomerates we empirically verify that...