We consider bargaining between a seller and a buyer with private information about his valuation. We introduce the novel feature that with some probability a new buyer may visit the seller's shop each period, which grants the seller the option to switch to a new trading partner. We analyze the...

In an internal capital market, individual departments may compete for a share of the firm's budget by engaging in wasteful influence activities. We show that firms with more levels of hierarchy may experience lower influence costs than less hierarchical firms, even though the former provide more...

This paper presents a theory of integration based on the inability of parties to write comprehensive financial contracts. In our model, integration entails both benefits and costs. On the one hand, integration involves liquidity spillovers between projects ensuring that integrated firms can...

We consider a game of signaling where the informed sender proposes a contract, which can only be accepted or rejected by the receiver. While most of the literature considers a bilaterally monopolistic setting, we embed the game in a search market environment where a sender may switch to another...

We present a model where an incumbent firm raises its price in response to increasing competition. It may pay the incumbent to exploit a rather immobile fraction of consumers instead of capturing a larger but more contested segment of the market. In particular, we apply our results to deregulation.

If ownership and control are separated, leaving the manager with discretion may be of value. This paper discusses the extent to which a firm's ownership structure may serve as a commitment for shareholders not to interfere with the manager's project decisions, thereby reducing the agency cost of...

We consider a competitive search equilibrium where firms' publicly observable wage offers lead to the formation of independent submarkets. While in the benchmark case workers' productivities can be verified at a distance, our main analysis concerns the case of adverse selection where workers can...

We consider price formation in a simple market where sellers have fixed capacity and where any seller is dispensable (`buyer market'). In the analyzed game sellers simultaneously quote prices and buyers choose which seller to visit. If demand exceeds supply at a given seller, buyers are randomly...

The first part of this paper shows that in a noncooperative bargaining model with alternating offers and time preferences the timing of issues (the agenda) matters even if players become arbitrarily patient. This result rises the question which agenda should come up endogenously when agents...

We analyze a model of duopolistic competition in a search market, where firms compete by choosing prices and the number of outlets, while consumers are ignorant about the individual locations. The degree of price transparency prevailing in the market is modeled by the fraction of consumers who...