This paper discusses firm behavior, market performance, and the public and private institutions that arise in systems markets, i.e., markets where consumers use compatible components together to generate benefits. In such markets, which include communications networks and 'hardware/software'...

The players in most economically important games are agents, not principals. This raises the possibility of the principal's setting a strategic compensation scheme. The central question addressed here is whether unobservable agency contracts can serve as precommitments. I argue that, in terms of...

We analyze the central economic issues raised by U.S. v Microsoft. Network effects and economies of scale in applications programs created a barrier to entry for new operating system competitors, which the combination of Netscape Navigator and the Java programming language potentially could have...

This article analyzes the behavior of a multiplant monopolist in a spatial market. After demonstrating that the profit maximizer may establish an excessive or insufficient number of plants, the article derives criteria by which to determine the direction of this distortion. The distortion arises...

In many markets, including payment cards and telecommunications, service providers operate networks that support customer transactions with each other. When the two sides of a transaction belong to more than one network in common, the question arises as to which network will carry the...

We examine the effects of market structure and the internal organization of firms on equilibrium R&D projects. We compare a monopolist's choice of R&D portfolio to that of a welfare maximizer. We next show that Sah and Stiglitz's finding that the market portfolio of R&D is independent of the...