We study how the financial constraints of agents affect the behavior of principals in the context of franchising. We develop an empirical model of franchising starting with a principal-agent framework that emphasizes the role of franchisees' collateral from an incentive perspective. We estimate...

The simultaneous occurrence of (ex post) involuntary unemployment and underemployment is explained by strategic contracting of firms operating in oligopolistic product markets. Firms have an incentive to offer labor contracts in which wage payments (net of opportunity costs of labor) exceed...

In standard durable-goods monopoly models, both the set of buyers and the set of prices are assumed to be continua. If the set of buyers is finite, the perfectly discriminating monopoly outcome is a unique subgame perfect equilibrium when the seller is sufficiently patient. Introducing instead a...

A vertically separated duopolistic market is analyzed in which manufacturers compete in wholesale price schedules and retailers in quantity. Under certainty there exists a continuum of equilibria. The introduction of an uncertain demand parameter, observed only by retailers, dramatically reduces...

We show that the Coase conjecture does not hold when a durable-goods monopolist also sells nondurable goods that are demand related to the durable. The presence of nondurable complements or substitutes reduces the rate at which the monopolist introduces the durable into the market. The price of...

The author shows that small differences in quality and production costs between durables and nondurables in a product line allow a durable goods monopolist to intertemporally price discriminate even with continuous trading. In particular, a monopolist would want to both sell and rent out a...

When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by "restoring" second degree price discrimination. In...