This paper addresses two general questions. First, what is the eeect of market structure on the development of a network in a dynamic model with rational expectations? Secondly, is the intuition that network externalities arèeco-nomies of scale on the demand side' correct? These questions are examined in a model of durable goodproduction in the presence of network externalities. Two results are...

In this paper, we propose an explanation for the prominent role of manufacturers in the financing of their own product sales— so called “captive finance.” By lending against their own product as collateral, durable goods manufacturers with market power can commit to restrict production and maintain resale values in future periods, preserving rents today. Using data on captive financing support ...

The bargaining approach can be usefully applied to address some classical questions in cooperative game theory. One of these concerns the formation of coalitions and the writing of binding agreements among groups of players. Many years ago, Ronald Coase argued that such negotiations would invariably end in an efficient outcome, and that bargaining power — whatever that is — would be reflected i...

The Coase±Williamson response to the question `̀ why do firms exist?'' is based on the idea that transaction costs in viable firms are lower than they would be if production was coordinated through the market. The explanatory focus of this argument is on the diminution of costs related to transactions between given individuals. However, this ignores the possibility of activities which are in pri...

We examine whether the Coase conjecture [7, 14, 4, 10] is robust against slight ability of commitment of the monopolist not to sell the durable goods to consumers. We quantify the commitment ability in terms of the speed that the durable goods perish, while keeping the time between the o ers small. We demonstrate that the slight commitment capability makes a substantial di erence by constructin...

The last decades have seen a growing interest in the theory of the firm by economic theory. Different theoretical strands have been developed, each trying to go further than the standard micro model of the firm as a capital-labour function. The original question of what is the firm can be traced back to the classic work of Coase (1937) still, his questions were only again effectively grasped in...