RAND Journal of Economics articles from September 2004

RAND Journal of Economics archives from September 2004

Sender or receiver: who should pay to exchange an electronic message?
September 22, 2004... We examine the pricing implications of call externalities, the benefits enjoyed by the recipient of a message sent by another user. We show that, with or without a network-profitability constraint, efficient pricing requires consideration of...

Price dispersion in the lab and on the internet: theory and evidence.
September 22, 2004... Price dispersion is ubiquitous in settings that closely approximate textbook Bertrand competition. We show that only a little bounded rationality among sellers is needed to rationalize such dispersion. A variety of statistical tests, based on...

Exploiting future settlements: a signalling model of most-favored-nation clauses in settlement bargaining.
September 22, 2004... Most-favored-nation (MFN) clauses have been used to address a repeat player's time-inconsistency problem in international trade, durable-goods monopoly pricing, franchise contracting, and settlement bargaining. We argue that a nonrepeat player...

Price cycles in markets with customer recognition.
September 22, 2004... Given that having bought earlier from a firm reveals something about the customers, the firms can try to use this piece of information by better fitting their market practices with respect to their previous customers. I consider an infinitely...

Investment and screening under asymmetric endogenous information.
September 22, 2004... This article provides an analysis of screening contracts in a complete but imperfect information environment as opposed to the usual incomplete information (Bayesian) environment. An agent faces a hold-up situation while making a cost-reducing...

Price discrimination in Broadway theater.
September 22, 2004... A common thread in the theory literature on price discrimination has been the ambiguous welfare effects for consumers and the rise in profit for firms, relative to uniform pricing. In this study I resolve the ambiguity for consumers and...

Information overload in a network of targeted communication.
September 22, 2004... As the costs of generating and transmitting information fall, the main bottlenecks in communication are becoming the human receivers, who are overloaded with information. For networks of targeted communication, I discuss the meaning of...

Mergers and the evolution of industry concentration: results from the dominant-firm model.
September 22, 2004... To what extent will an industry in which mergers are feasible tend toward monopoly? We analyze this question using a dynamic dominant-firm model with rational agents, endogenous mergers, and constant returns to scale production. We find that...

Ignorance promotes competition: an auction model with endogenous private valuations.
September 22, 2004... I study a situation in which an auctioneer wishes to sell an object to one of N risk-neutral bidders with heterogeneous preferences. The auctioneer does not know bidders' preferences but has private information about the characteristics of the...

Optimal debt with unobservable investments.
September 22, 2004... We study financial contracting when both an entrepreneur's investment and the resulting revenue are unobservable to an outside investor. We show that a debt contract is always optimal; repayment is induced by a liquidation threat that increases...

Using return policies to elicit retailer information.
September 22, 2004... We show that a manufacturer may prefer to offer a return policy when dealing with a retailer who holds advance knowledge about market conditions. Roughly stated, the manufacturer offers a liberal return allowance in lieu of a lower price to...