This paper investigates bloatware bundling and product pricing decisions of a monopolistic firm when consumers can remove the bloatware from their electronic devices after purchase. We show conditions under which it is optimal for the firm not to bundle bloatware with their products. Furthermore, we show that even if the firm can make it harder for consumers to remove bloatware, the firm is not...

We characterize equilibria of oligopolistic markets where identical firms with constant marginal cost compete à la Cournot. For given maximal willingness to pay and total demand, we first identify all combinations equilibrium consumer surplus industry profit that can arise from arbitrary demand functions. Then, as a further restriction, fix the average above (i.e., first‐best surplus) possible ...

We analyze costly quality disclosure with horizontally differentiated products under duopoly and monopoly, and characterize the effect of competition on disclosure and welfare. We show that expected disclosure is higher under monopoly than under duopoly, and the welfare comparison depends on the level of disclosure cost: when the disclosure cost is low, welfare is higher under monopoly than duo...

Individual heterogeneity is an important source of variation in demand. Allowing for general heterogeneity is needed for correct welfare comparisons. We consider general heterogenous demand where preferences and linear budget sets are statistically independent. We find that the dimension of heterogeneity and the individual demand functions are not identified. We also find that the exact consume...

An unavoidable aspect of electronic commerce is the collection of personal information. Although personal information is paramount to improving services and designing personalized offerings, its collection and use also generates privacy concerns. This study analytically examines the optimal information collection and usage practices in the presence of privacy costs. We use an analytical model i...

The abundance of flawed software has been identified as the main cause of the poor security of computer networks since major viruses and worms have been exploiting the vulnerabilities of such software. As an incentive mechanism for software security quality improvement, software liability has been intensely discussed among computer scientists, jurists, and policy makers for a long time. In this...

Over the past decade, American businesses have invested heavily in information technology (IT) hardware. Unfortunately, it has been difficult to assess the benefits that have resulted. One reason is that managers often buy IT to enhance customer value in ways that are largely ignored in conventional output statistics. Furthermore, because of competition, firms may be unable to capture the full ...

We derive the closed-form solution characterizing the equilibrium in a circular-city model with competing firms of heterogeneous production costs. Tractability issues in this setting are well known and have not been resolved in prior work. In this paper, the equilibrium solution illustrates effects of production costs on firms’ strategic decisions, their aggregate profit, and consumer surplus.

A stricter merger control policy increases the expectation of future price competition. In response, firms increase product differentiation to sustain higher prices. Failing to account for such policy-variant prices may lead to overestimation of the increase in consumer surplus due to the stricter merger policy, rendering the policy analysis subject to the Lucas Critique. D 2004 Elsevier B.V. A...