The authors consider an imperfect test of product quality and ask how it interacts with adverse selection to affect market size. Although one might expect adverse selection to be mitigated, there are scenarios where it is exacerbated. Also, two counterintuitive comparative static results emerge....

The authors analyze a common property resource model with a single incumbent firm that faces future potential entry of a rival. The cost of harvest from the resource is a function of the stock size. By drawing down current stock sufficiently, which lowers future stock, the incumbent can make...