The paper clarifies how sunk costs can lead a rational incumbent to innovate less than an entrant. It also demonstrates that competition among incumbents yields less adoption of new and more efficient production technology than competition which includes entrants. The results suggest that policy...

Competition among profit-seeking firms in an oligopolistic industry inherently generates incentives for firms to commit to maximize a performance metric other than profit. We briefly review the underlying theory, analyze its ramifications in a Cournot duopoly, and consider feasibility...

Consumption of products and services involves paying for other people's labor. Since everyone is endowed with 24 hours per day but works and consumes differently, there must exist net sellers and net buyers of time. We theoretically explore the equilibrium pattern of net selling and buying of...

A meritocracy is modeled as a multiple-prize contest among agents who are heterogeneously endowed with talent and wealth and thus vary in the disutility of exerting effort and spending money to earn credentials. In equilibrium, many richer but less-talented agents obtain better credentials than...