The aim of auditing is to protect active and potential investors from accounting fraud. However, the large number of auditing scandals demonstrates that auditing has a dark side. This dark side of auditing is the topic of this paper. Correct auditing is a public good, provided by private...

Stock exchange operators compete for order flow by setting "make" fees for limit orders and "take" fees for market orders. When traders quote continuous prices, they can choose prices that perfectly neutralize any fee division, and traders stream to the exchange with the lowest total fee. The...

Much significant research has been done to shed light on discrimination of females in, for example, labor markets. Less is known, in contrast, about the amount of discrimination in the virtual world of online gaming. In an early study, Castronova (2004) finds that female avatars receive about...

The Internet has changed the nature of doing business as well as the nature of competition in many industries. Consumers are more empowered than ever with valuable information such as prices, products, and store ratings. Because of this, some researchers even predicted, during the early stage of...

We consider an entrepreneur that is the sole producer of a cost reducing skill, but the entrepreneur that hires a team to use the skill cannot prevent collusive trade for the innovation-related knowledge between employees and competitors. We show that there are two types of diffusion-avoiding...

In many markets, sellers advertise their good with an asking price. This is a price at which the seller is willing to take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the...

In many markets, sellers advertise their good with an asking price. This is a price at which the seller is willing to take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the...

Despite widespread use in online transactions, rating systems only provide summary statistics of buyers' diverse opinions at best. To investigate the consequences of this coarse form of information aggregation, we consider a dynamic lemons market in which buyers share their evaluations...

This paper explores the private and social benefits from barter exchange in a monetized economy. We first prove a no-trade theorem regarding the ability of firms with double-coincidences-of-wants to negotiate improvements in trade among themselves relative to the market outcomes. We then...

It is well-established that incumbent firms may try to deter new market entry by pretending to be stronger than they really are (e.g. by imitating the high output level of a low cost monopolist). In this article, we show that in some cases an incumbent may prefer the opposite, namely to...