Understanding the process of software adoption is of paramount importance to software start-ups. We study a monopolistic seller’s optimal seeding, sequencing, and pricing strategies under network effects. We demonstrate the importance of adoption sequencing as well as controllability over the seeding process to seller’s profit, consumer surplus, and social welfare. Under multi-pricing, full inf...

This paper compares Bertrand and Cournot equilibria in a differentiated duopoly with substitute goods and product R&D. I find that R&D expenditure, prices and firms’ net profits are always higher under quantity competition than under price competition. Furthermore, output, consumer surplus and total welfare are higher in the Bertrand equilibrium than in the Cournot equilibrium if either R&D spi...

Traditional measures of consumer surplus (CS) have implicitly assumed that the quality expected is the same as the quality that is paid for ex ante. However, when product or service quality cannot be perfectly verified ex-ante by consumers in markets with asymmetric information, and actual quality received may not necessarily equal quality expected, CS would not be precisely measured. This may ...

A tractable model of pricing under directed search is proposed and integrated with a position auction for better slots (which rationalizes the consumer search order). Search is always inefficiently low because firms price out further exploration. Equilibrium product prices are such that the marginal consumer’s surplus decreases in the order of search. Consumers always find it optimal to follow ...

When economists first turned to applied benefit-cost analysis in the 1930s and 1940s, prices were the only widely accepted measure of benefits. Perhaps surprisingly, economists did not consider measures like consumer surplus, which seemed quite foreign. Consequently, when they turned to nonmarket valuation for goods like outdoor recreation, their constructed demand curves seemed less informativ...

Geographically dispersed sellers in electronic reverse-marketplaces such as those hosted by Freemarkets are uncertain both about the number of opponents participating and their coststructure in any given market session. Over the course of several market sessions, they learn about the competitive structure of their market. How sellers learn to reduce the level of uncertainty is dependent on the ...

The authors develop a contingent trip model to estimate the recreation demand for and value of a potential rail-trail site in north-east Georgia. The contingent trip model is an alternative to travel cost modelling useful for ex ante evaluation of proposed recreation resources or management alternatives. The authors estimate the empirical demand for trips using a negative binomial regression sp...

We compare aviation markets under conditions of competition, codesharing contracts and anti-trust immune alliances, assuming that demand for flights depends on both fares and the level of frequency offered. Using a hybrid competitive/cooperative game theoretic framework, we show that the stronger the inter-airline agreement, the higher the producer surplus. On the other hand, consumer surplus a...