type="main" <p>We present a theory for why it might be rational for a platform to limit the number of applications available on it. Our model is based on the observation that even if users prefer application variety, applications often also exhibit direct network effects. When there are direct...</p>

We study the effect of different levels of information on two-sided platform profits—under monopoly and competition. One side (developers) is always informed about all prices and therefore forms responsive expectations. In contrast, we allow the other side (users) to be uninformed about prices...

In Cournot's model of complements, the producers of A and B are bothmonopolists. This paper extends Cournot's model to allow for competitionbetween complements on one side of the market. Consider two complements,A and B, where the A + B bundle is valuable only when purchasedtogether. Good A is...

We analyze the optimal strategy of a high-quality incumbent that faces alow-quality ad-sponsored competitor. In addition to competing throughadjustments of tactical variables such as price or advertisingintensity, we allow the incumbent to consider changes in its businessmodel. We consider four...

We study competitive interaction between profit-maximizing firms thatsell software and complementary goods or services. In addition totactical price competition, we allow firms to compete through businessmodel reconfigurations. We consider three business models: theproprietary model (where all...

When do dynamic nonconvexities at the disaggregate level translate into dynamic nonconvexities at the aggregate level? We address this question in a framework where the production of differentiated intermediate inputs is subject to dynamic nonconvexities and show that the answer depends on the...

General Motors's (GM's) acquisition of Fisher Body is the classic example of market failure in the literature on contracts and the theory of the firm. According to the standard account, in 1926 GM merged vertically with Fisher Body, a maker of auto bodies, because of concerns over...

Existing models of the principal-agent relationship assume the agent works only under extrinsic incentives. However, many observed agency contracts take the form of a fixed payment. For such contracts to work, the principal must trust the agent to work in the absence of incentives. I show that...