We consider the interaction between an incumbent firm and a potential entrant, and examine how this interaction is affected by demand fluctuations. Our model gives rise to procyclical entry, prices, and price-cost margins, although the average price in the market can be countercyclical if the...

We characterize optimal selling mechanisms in auction environments where biddersmust incur a cost to learn their valuations. These mechanisms specify for eachperiod, as a function of the bids in previous periods, which new potential buyersshould be asked to bid. In addition, these mechanisms...