We challenge the view that the presence of powerful buyers stifles suppliers´ incentives to innovate. Following Katz (1987), we model buyer power as buyers´ ability to substitute away from a given supplier and isolate several effects that support the opposite view, namely that the presence of...

We characterize a monopolist's optimal offer of service plans when only informed customers know already at the contracting stage whether their demand is high or low, while uninformed customers may learn their demand only after incurring some costs, if at all. While informed customers purchase...

This paper studies the impact of buyer power on dynamic efficiency. We consider a bargaining model in which buyer power arises endogenously from size and may impact on a supplier's incentives to invest in lower marginal cost. We challenge the view frequently expressed in policy circles that the...

Wir untersuchen die Rolle von Vertragstypen und Zugangsregulierung auf Innovation und Wettbewerb. In einem Duopolmodell zeigen wir, dass Ex-post-Verträge, die nach den Investitionsentscheidungen getroffen werden, zu einer Welt führen, in der seltener Infrastruktur dupliziert wird, in der es...

In a dynamic model of optimal security design, we show when firms should preserve "equity capacity" through choosing high target leverage or "debt capacity" through choosing low target leverage. Thereby, firms reduce a problem of underinvestment or overinvestment when they must raise future...

We analyze the role of different contract types and access regulation on innovation and competition in telecommunications in the context of Next Generation Access Networks. Within a standard duopoly model, we show that ex-post access contracts lead less often to the duplication of investment,...

An upstream supplier that is constrained both by downstream competition and the threat of demand-side substitution faces a tradeoff between maximizing joint-profit and extracting surplus. Although joint-profit maximization calls for relatively high marginal wholesale prices in order to dampen...

Firms frequently offer refunds, both when physical products are returned and when service contracts are terminated prematurely. We show how refunds act as a "metering device" when consumers learn about their personal valuation while experimenting with the product or service. Our theory predicts...

I take an efficient contracting approach to answer the question how much "job protection" to offer employees, in particular those at the top of organizations. Given their privileged information or formal authority, senior managers who are not given such protection are likely to take...