In this paper, we study a new channel to explain firms' price setting behavior. We propose that uncertainty about factor prices has a positive effect on markups. We show theoretically that firms with higher shares of inputs with volatile prices set higher markups. We use the Bartik shift-share...

Extending Milgrom and Roberts (1982) we present an infinite horizon entry model, where the incumbent(s) may use the current price to signal its strength to deter entry. We show that, due to the importance of entrants' types on the post-entry duopoly/oligopoly profits, the incumbent(s) may want...

In this paper we develop an analytical model that characterizes the structure of price dispersion observed in electronic markets. Findings of our model are consistent with empirical evidence in these e-markets. We show that when different types of buyers' have different search costs, firms...

Traders differ in speed and their speed differences matter. I model strategic interactions induced when high frequency traders (HFTs) have different speeds in an extended Kyle (1985) framework. HFTs are assumed to anticipate incoming orders and trade rapidly to exploit normal-speed traders'...

In March of 2000 the New York Stock Exchange proposed a merger with The Nasdaq Stock Market. Applying a qualitative assessment to the proposed merger from the organizations' perspective it is argued that the merger would be favorable for both organizations. Applying a quantitative assessment to...

Anticompetitive mergers increase competitors' profits, since they reduce competition. Using a model of endogenous mergers, we show that such mergers nevertheless may reduce the competitors' share-prices. Thus, event-studies can not detect anti-competitive mergers.

We study resource extraction by a non-renewable resource supplier who faces demand from two regions, one of which employs a tax on the imported resource and a subsidy on the available backstop technology, and one that has no environmental policy in place. The resource extraction path possibly...

The appearance of a Brownian term in the price dynamics on a stock market was interpreted in [De Meyer, Moussa-Saley (2003)] as a consequence of the informational asymmetries between agents. To take benefit of their private information without revealing it to fast, the informed agents have to...

We examine the strategies of different types of investors (the insider, the information follower, and the price follower) who have asymmetric information about future news events and how these strategies affect stock prices. We show that stock price jumps occur when the insider receives accurate...