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...

Nous considérons une firme qui génère un risque pour l'environnement via son activité industrielle et qui a une information privée à la fois sur son effort de précaution et sur le montant de ses actifs. Nous étudions l'interaction entre l'audit ex ante de l'effort de précaution par un...

We explore the joint determination of product differentiation strategy and corporate leverage in a setting where (i) product differentiation is valued by customers; (ii) debt is necessary to discipline managers; and (iii) liquidation is costly for customers, in particular, when products are...

We develop a model in order to explore how a bank's equity stake in a competitor of a borrower affects the financing relationship with the borrower and product market outcomes. The bank's affiliation with the competitor can give rise to anti- or pro-competitive effects. Large equity stakes can...

This paper studies the interplay between corporate leverage and product pricing when liquidation is costly for customers. I develop a model which illustrates that highly leveraged firms can enter a vicious circle in which financial distress and sales drops are re--enforcing. There is a "good''...

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...