Brander and Lewis argue in a seminal paper (AER, 1986) that a Þrm’s debt-equity ratio should have important strategic effects on product market competition. We test their model in a duopoly experiment under both, Bertrand and Cournot competition. We Þnd that leverage has strategic effects, but those effects are much weaker than predicted by theory. SpeciÞcally, we Þnd for price competition a ge...

Olson (1965) has argued that one way large groups overcome the free-rider problem is through by-product lobbying. The by-product firm sells a private good to potential members of the interest group and finances lobbying with its profits. It has been argued that by-product lobbying firms cannot survive competition with for-profit firms, since this would compete away monopoly rents, leaving the f...

In a theoretical framework we compare production-in-advance type and production-to-order type environments. We carry out our analysis in the framework of a symmetric capacity-constrained Bertrand-Edgeworth duopoly game and prove that the equilibrium profits are the same in case of production in advance and production to order. In addition, advance production results in higher prices than produc...