Two producers offer differentiated goods to a representative consumer. The buyer has distinct marginal valuations for the quality of the products. Each producer perfectly knows the consumer's taste for its own product, but remains uninformed about its taste for the rival's product. When each...

Two producers offer differentiated goods to a representative consumer. The buyer has distinct marginal valuations for the quality of the products. Each producer knows perfectly the consumer’s taste for its own product, but remains uninformed about its taste for the rival’s product. When each...

Producers of software viewers commonly offer basic versions of their products for freewhile more sophisticated versions are highly priced, thereby providing less attractive orlower valuations consumers with larger utility levels. We give some foundations to thisoutcome called versioning. We...

This paper shows that cost allocation can endogenously arise as a coordination mechanism in a decentralized firm. This result is derived in a setting with multiple (internally supplied) resources shared by multiple users, which constitutes a departure from previous literature. While standard...

This paper analyzes tax/subsidy competition and transfer pricing regulation between governments involved in trade through a multinational firm and a joint venture using an input provided by the former. The paper takes into account the fact that in absence of bargaining, any model of such JV is...

This paper studies how sunk costs affect a financially constrained incumbent's ability to deter entry into its market. Sunk costs make it less attractive to the incumbent to accommodate entry by liquidating assets in place and exiting the market. This may render entry by a prospective rival...

We embed proprietary trading into a model of bank lending. Opportunities to engage in purely speculative trading can harm the real economy. This is because banks, when devoting cheap but scarce deposits to lending rather than to gambling, must be compensated for giving up gambling rents. This...

I study a model of market-liquidity provision by levered intermediaries that, besides operating trading desks, run deposit-taking franchises. Levered intermediaries’ heightened incentive to absorb risk helps to counteract liquidity-provision frictions that, in an unlevered economy, would lead...

We study whether the Sarbanes-Oxley Act (SOX) of 2002 made firms less opaque. For identification, we use a difference-in-differences estimation approach and compare EU firms that are cross-listed in the US—and therefore subject to SOX—with comparable EU firms that are not cross-listed. We...

Strategic investors, such as corporate venture capitalists, engage in the financing of start-up firms to complement their core businesses and to facilitate the internalization of externalities. We argue that while strategic objectives make it more worthwhile for an investor to elicit high...