This paper provides a new perspective on the validity of the so-called quot;leverage theoryquot;. In a model of preemptive innovation in quot;systemsquot; markets, I examine the effect of bundling on Ramp;D incentives. I find that bundling provides a channel through which monopoly...

With the growing appeal of cross-border trading in Europe, efforts are under way to establish consolidated exchanges that offer trading in stocks from many European countries. An analysis of these evolving pan-European exchanges suggests that consolidation could reduce the costs and...

The delivery and payment of bills over the Internet could offer many advantages - low processing costs and enhanced marketing opportunities for billers, savings in time and postage for customers. Nevertheless, electronic billing has not found favor with potential users. A lack of coordination...

We examine implications of a society's cultural emphasis on moral sentiments. Entrepreneurs and investors interact in a game that entails both adverse selection and moral hazard; entrepreneurs may attempt to breach their contracts and expropriate investors. An agent is born into a particular...

The idea that an incumbent supplier may tie two complementary products to fend off potential entrants is popular among practitioners yet is not fully understood in formal economic theory. This article makes sense of the argument by formally deriving a dynamic version of the old leverage...

We examine a mechanism by which bundling may inefficiently deter entry into the market. The model considers an incumbent monopolist in two complementary components that faces a series of entry attempts by rivals. It is shown that the incumbent can practice bundling to buttress its monopoly...