Once a new technology has been invented, there is a credible threat of imitation when patent protection is strong and imitation cost is low. Within the area of credible imitation, the innovator has an incentive to postpone technology adoption when the cost of imitation is relatively high. The...

This paper investigates how call and network externalities affect a monopolist’s optimal nonlinear pricing of a two-way telecommunication service. The existence of call externalities results in all types of subscribers (even the highest type) making suboptimal quantities of calls in the...

This paper considers a functional quality degradation of software with twoway features (such as reading and writing in word-processors). A software monopolist differentiates products by introducing a functionally down-graded version (e.g. the read-only version) by eliminating some functions of...

A durable-goods monopolist may use quality degradation as a commitment not to lower price in the future. The introduction of damaged goods expedites lowvaluation consumers? future demands, and helps the firm to mitigate the Coasian time-consistency problem. In such a case, damaged goods are more...

This paper examines how the presence of network externalities affects a monopolist’s incentive for quality degradation and its welfare consequence. The software and the Internet service industries provide our primary motivation. The network externality may lead to a Pareto-improving quality...

This paper examines how a durable-goods monopolist’s choice of product quality interacts with time inconsistency problems in an environment, where the firm faces an irreversible decision on quality and unit production costs increase in quality. The monopolist may have incentives to choose a...

This paper examines how the option for licensing affects research and development (R&D) and social welfare.We find that if cost reduction from R&D is sufficiently small and there is an option of licensing, firms will do non-cooperative R&D. In absence of licensing, firms will do cooperative R&D...

This note examines firms’ strategic choices between leasing and selling in a market for horizontally differentiated durable goods. Firms’ decisions on marketing strategies may lead to socially inefficient outcomes. Moreover, a prisoners’ dilemma-type situation may arise.

This paper investigates the effect of different patent regimes on R&D investment and social welfare in a duopoly market with uncertain R&D process. We find that strong patent protection increases R&D investment of at least one firm but whether both firms? R&D investment will be more under strong...

This paper analyzes sequential games of double-sided Bertrand competition in the deposit and credit markets, when banks are free to reject customers and cannot distinguish among borrowers. The timing of competition is crucial when customers apply once. Interest rates are pushed upwards when the...