This paper studies probabilistic selling with vertically differentiated products when firms compete and consumers anticipate the potential post-purchase regret raised by possibly obtaining the inferior products. Intuitively, anticipated regret hurts the attractiveness of probabilistic selling....

This paper examines the relationship between tying and vertical integration when an input monopolist can require its downstream buyer to purchase a competitively supplied input from it, or integrate forward in the downstream market. We show tying is an imperfect substitute for vertical...

We study a duopoly vertical competition in which one firm sells a transparent product and the other sells an uncertain product that may induce consumer feelings. We identify a neutrality condition under which those feelings do not affect either firm’s profit, but this neutrality can be broken....