This Paper provides a conceptual framework of multilateral bargaining in a bilaterally oligopolistic industry to analyse the motivations for horizontal mergers, technology choice, and their welfare implications. We first analyse the implication of market structure for the distribution of...

This paper analyzes merchant markets in the presence of vertically-integrated firms. We discuss when vertical integration tends to increase the elasticity of (derived) demand in the merchant market because of indirect contraints arising from the retail market. We also discuss the relevance of...

We study optimal financial contracting for centralized and decentralized firms. Under centralized contracting, headquarters raises funds on behalf of multiple projects. Under decentralized contracting, each project raises funds separately on the external capital market. The benefit of...

We consider a monopolistic supplier's optimal choice of two-part tariff contracts when downstream firms are asymmetric. We find that the optimal discriminatory contracts amplify differences in downstream firms' competitiveness. Firms that are larger-either because they are more efficient or...

In this article we present some of the reasons why markets with advice may malfunction, and explore the potential rationales for some of the policy proposals that are on the table. Roman Inderst, University of Frankfurt and Imperial College London & Marco Ottaviani, Kellogg School of Management,...

For an assessment of market power on the wholesale (or merchant) market in the presence of vertically integrated firms, we analyze the interaction of direct constraints, arising from competition on the wholesale market, and of indirect constraints, arising from substitution on the retail market....

This paper poses the question of how a firm should optimally choose both its organization and its compensation in the pursuit of innovation. One key result is that incentive pay arises as a robust instrument of innovation management both with and without delegation, although in the present model...

I contrast various models of vertical contracting that view upstream interactions either through the lenses of bilateral contracting and negotiations or through the lenses of a "market interface" with uniform contractual terms. Existing models contrast starkly in their policy implications, in...

We consider an imperfectly competitive loan market in which a local (e.g., relationship) lender has valuable soft, albeit private, information, which gives her a competitive advantage vis-à-vis distant transaction lenders who provide arm’s-length financing based on hard, publicly available...

We study a model in which a CEO can entrench himself by hiding information from the board that would allow the board to conclude that he should be replaced. Assuming that even diligent monitoring by the board cannot fully overcome the information asymmetry vis-à-vis the CEO, we ask if there is...