This paper investigates how the formation of larger buyers affects a supplier's profits and, by doing so, his incentives to undertake non-contractible activities. We first identify two chan-nels of buyer power, which allows larger buyers to obtain discounts. We subsequently exam-ine the effects...

We consider a competitive search equilibrium where firms' publicly observable wage offers lead to the formation of independent submarkets. While in the benchmark case workers' productivities can be verified at a distance, our main analysis concerns the case of adverse selection where workers can...

We consider price formation in a simple market where sellers have fixed capacity and where any seller is dispensable (`buyer market'). In the analyzed game sellers simultaneously quote prices and buyers choose which seller to visit. If demand exceeds supply at a given seller, buyers are randomly...

The first part of this paper shows that in a noncooperative bargaining model with alternating offers and time preferences the timing of issues (the agenda) matters even if players become arbitrarily patient. This result rises the question which agenda should come up endogenously when agents...

This paper considers a dynamic version of Akerlof's (1970) lemons problem where buyers and sellers must engage in search to find a trading partner. We show that if goods are durable, the market itself may provide a natural sorting mechanism. In equilibrium, high-quality goods sell at a higher...

We discuss a competitive (labor) market where firms face capacity constraints and individuals differ according to their productivity. Firms offer two-dimensional contracts like wage and task level. Then workers choose firms and contracts. Workers might be rationed if the number of applicants...

This paper considers bargaining with one-sided private information and alternating offers where an agreement specifies both a transfer and an additional (sorting) variable. Moreover, both sides can propose menus. We show that for a subset of parameters the alternating-offer game has a unique...

We analyze a model of duopolistic competition in a search market, where firms compete by choosing prices and the number of outlets, while consumers are ignorant about the individual locations. The degree of price transparency prevailing in the market is modeled by the fraction of consumers who...

The present paper analyzes the effect of competition for scarce corporate financial resources on managers' incentives to generate profitable investment opportunities. Competition is only unambiguously beneficial if projects are symmetric. If they are asymmetric, competition for corporate...

This paper considers a model of moral hazard with the additoinal feature that the principal has private information. For instance, in an organizational setting the firm may be better informed about the profitability of a sales area for which it seeks to employ a new sales representative. We show...