On an increasing scale auctions are used to allocate the licenses to operate on markets which are thought not suited for free entry. According to standard economic arguments, the license fees paid at the auction will not affect consumer prices since they constitute a sunk cost. This standard view is not uncontested though. In the present paper we experimentally investigate two arguments for a p...

In this paper, we develop an empirical model of consumer usage and price uncertainty under a threepart tariff plan. Using this model, we study the effects of the recently proposed “Bill Shock” regulation in the mobile phone industry, a proposal that would inform consumers when they use up the monthly allowance of their mobile phone price plan. Using a rich billing dataset, we estimate an indust...

This paper provides a new theory for two-sided payment card markets by positing better microfoundations. Adopting payment cards by consumers and merchants requires a fixed cost, but yields lower marginal costs of making payments. Considering this together with the heterogeneity of consumer income and merchant size, our theory derives card adoption and usage pattern consistent with cross-section...

The surge of road pricing projects in the U.S. and around the globe over the past fifteen years has been enabled by a set of new communication and transportation technologies. There is currently a wide array of technical configurations ranging from systems based on “tried and true” shortrange radio communications to experimental systems relying on global positioning satellites. These technologi...

This paper provides a new theory for two-sided payment card markets. Adopting payment cards requires consumers and merchants to pay a fixed cost, but yields a lower marginal cost of making payments. Analyzing adoption and usage externalities among heterogeneous consumers and merchants, our theory derives the equilibrium card adoption and usage pattern consistent with empirical evidence. Our ana...