We study competition in two sided markets with common network externality rather than with the standard inter-group e¤ects. This type of externality occurs when both groups bene…t, possibly with di¤erent intensities, from an increase in the size of one group and from a decrease in the size of the other. We explain why common externality is relevant for the health and education sectors. We focus...

Since 1998 a lots of European Internet Service Providers (ISP) started to provide internet access freely. Why does a profit maximizing operator adopts this pricing policy? A consumer who wants to surf on the net needs to buy two services: the access from the ISP and the connection from the Telephone Operator. Since the two services are complements, the price of one service creates a negative ex...

Standard lessons from economics tell us that an externality creates inefficiency, and that this inefficiency can be removed by internalizing the externality. This papers considers how successfully these lessons can be extended to intergenerational externalities such as emissions of greenhouse gas. For intergenerational externalities, the standard lessons involve comparisons between states whose...

The Energy Star certification program highlights energy efficient goods with a label. Given that it could either focus attention on the energy consumption of alternatives or provide a license to ignore the attribute, it follows that recent research highlights heterogeneity in consumers’ responses to the label. This paper answers two questions implied by this heterogeneity. First, do individuals...

We examine experimentally an auction model with externalities in which competing firms bid for licenses to a cost-reducing technology. Since winning bidders impose a negative externality on the losers, bids must account for both the value of winning the auction and the negative value of losing brought about by rivals reducing their costs. Experimental treatments differ in the severity of the ne...

If rational individuals pay the full costs of their decisions about food intake and exercise, economists, policy makers, and public health officials should treat the obesity epidemic as a matter of indifference. In this paper, we show that, as long as insurance premiums are not risk rated for obesity, health insurance coverage systematically shields those covered from the full costs of physical...