I model endogenous horizontal and vertical product differentiation with arbitrarily many heterogeneous firms. Firms are asymmetric in that they differ in their marginal costs. I prove that under an equilibrium refinement, all economically relevant firm outcomes are uniquely determined across all strict subgame perfect Nash equilibria. There are two central results. First, a firm’s price, market...

In this paper we examine the behavior of a firm that produces a product with a privatelyobserved safety attribute; that is, consumers cannot observe directly the product’s safety. The firm may, at a cost, disclose its safety prior to sale; alternatively, if a firm does not disclose its safety then consumers can attempt to infer its safety from the price charged. The liability system is importan...

We present a model of fixing or patching a software problem after the product has been released in the market. Specifically, we model a software firm’s trade-off in releasing a buggy product early and investments in fixing it later. Just as the marginal cost of producing software can be effectively zero, so can be the marginal cost of repairing multiple copies of defective software by issuing p...

We study the conformity of marginal unconditional and conditional models with a joint model under assumptions of epistemic irrelevance and independence, within Walley’s theory of coherent lower previsions. By doing so, we make a link with a number of prominent models within this theory: the marginal extension, the irrelevant natural extension, the independent natural extension and the strong pr...

Abstract: Companies with market power occasionally engage in intentional quality reduction of a portion of their output as a means of offering two qualities of goods for the purpose of price discrimination, even absent a cost saving. This paper provides an exact characterization in terms of marginal revenues of when such a strategy is profitable, which, remarkably, does not depend on the distri...

This paper studies second degree price discrimination for information goods. Prior research in the context of traditional goods (where marginal costs are convex as a function of product quality) shows that a firm can increase profits by offering vertically differentiated products to heterogeneous consumers. Some researchers have obtained the converse result for information products, assuming ne...

This study augments the traditional linear cobweb model with lower and upper bounds for variations of output. Its purpose is to detect the relationship between the output constraints and the dynamics of the modified model. Due to the upper and lower bounds, a transitional function takes on a tilted z-profile having three piecewise segments with two turning points. It prevents the price (or quan...

This paper examines whether growth regressions should incorporate dualism and structural change. If there is a differential across sectors in the marginal product of labour, changes in the structure of employment can raise aggregate total factor productivity. The paper develops empirical growth models that allow for this effect in a more flexible way than previous work. Estimates of the models ...

The labor surplus economy model has as its basic premise the inability of unskilled agricultural labor markets to clear in countries with high man/land ratios. In such situations, the marginal product of labor is likely to fall below a bargaining wage, related to the average rather than the marginal product. The reallocation of such disguisedly unemployed workers by means of “balanced” intersec...

Quantity discount pricing is a common practice used by business-to-business and business-toconsumer companies. A key characteristic of quantity discount pricing is that the marginal price declines with higher purchase quantities. In this paper, we propose a choice-based conjoint model for estimating consumer-level willingness-to-pay (WTP) for varying quantities of a product and for designing op...