In this paper we show that, in the presence of buyer and seller power, a monopolist can enter into a costly contractual relationship with a low-quality supplier with the sole intention of improving its bargaining position relative to a high-quality supplier, without ever selling the good...

Double marginalization causes inefficiencies in vertical markets. This paper argues that such inefficiencies may be beneficial to final consumers in markets producing vertically differentiated goods. The rationale behind this result is that enhancing efficiency in high-quality supply chains...

Contractual inefficiencies within supply chains increase an input price above its marginal cost, therefore they are considered detrimental to consumer surplus. We argue that such inefficiencies may be beneficial to consumers in quality-differentiated markets. Indeed, enhancing contractual...

In this paper we analyze the private and public incentives towards skill acquisition when the skill level of workers determines the quality level of goods, and both labor and product markets are non competitive. We delve into the mechanisms that determine the equilibrium skill acquisition...

Are labels good or bad for consumers and firms? The answers may seem straightforward since labels improve information, yet economic theory reveals situations where their introduction reduces the welfare of, at least, some market participants. This essay reviews the theoretical literature on...

This paper considers the effects of the opportunity to change partners on communication. We experiment a standard cheap talk game where a player observes a private forecast before disclosing it (truthfully or untruthfully) in a message that he/she sends to his/her partner. Two treatments are...

This paper considers the effects of labels in a vertically differentiated duopoly. A label certifies the level of a product's measurable characteristic. It is shown that the certification label chosen by a private (for profit) certifier is lower than both the socially optimal and the firm's...

Are labels good or bad for consumers and firms? In this essay we analyze the label's nature as information revealing mechanism and explore the theoretical literature on labeling with respect to the following issues: i) the effects of labels on market structure, ii) the distortions due to the...