Recently added articles from RAND Journal of Economics:
Price discrimination in input markets.
Mar 22, 2009; ... We analyze the short- and long-run implications of third-degree price discrimination in input markets. In contrast to the extant literature, which typically assumes that the supplier is an unconstrained monopolist, in our model input prices are constrained by the threat of demand-side ...
An empirical investigation of the welfare effects of banning wholesale price discrimination.
Mar 22, 2009; ... Economic theory does not provide sharp predictions on the welfare effects of banning wholesale price discrimination: if downstream cost differences exist, then discrimination shifts production inefficiently, toward high-cost retailers, so a ban increases welfare; if differences in price ...
Managerial hedging, equity ownership, and firm value.
Mar 22, 2009; ... Suppose risk-averse managers can hedge the aggregate component of their exposure to firm's cash-flow risk by trading in financial markets but cannot hedge their firm-specific exposure. This gives them incentives to pass up firm-specific projects in favor of standard projects that contain ...
Market participation in delegated and intrinsic common-agency games.
Mar 22, 2009; ... We study how competition in nonlinear pricing between two principals (sellers) affects' market participation by a privately informed agent (consumer). When participation is restricted to all or nothing ("intrinsic" agency), the agent must choose between both principals' contracts and ...
Efficient tournaments within teams.
Mar 22, 2009; ... We analyze incentive problems in team and partnership structures where the only available information to condition a contract on is a partial and noisy ranking which specifies who comes first in efforts among the competing partners. This enables us to ensure both first-best efficient ...
Vertical restraints and horizontal control.
Mar 22, 2009; ... This article considers vertical restraints in a setting in which duopoly retailers each sell more than one manufactured good. Vertical restraints by a dominant manufacturer enable the firm to acquire horizontal control over a competitively supplied retail good. The equilibrium contracts ...
Corporate fraud and investment distortions in efficient capital markets.
Mar 22, 2009; ... Inefficient investment allocation induced by corporate fraud, where informed insiders strategically manipulate outside investors' beliefs, has been endemic historically and has recently attracted much attention. We reconcile corporate fraud and investment distortions with efficient capital ...
Costly participation and heterogeneous preferences in informational committees.
Mar 22, 2009; ... Informational committees are groups of people who are designated to gather information. This article develops a simple model of committee size based on costly participation and preference heterogeneity. In a setting in which the information structure and policy preferences are both ...
Coordination and delay in hierarchies.
Mar 22, 2009; ... This article studies hierarchical organizations where concerns for fast execution are important and employees must be coordinated to avoid wasteful duplications of effort. Simple conditions are provided for the time spent on coordinating subordinates to be increasing and the span of ...
Contracting for information under imperfect commitment.
Dec 22, 2008; ... We study optimal contracting under imperfect commitment in a model with an uninformed principal and an informed agent. The principal can commit to pay the agent for his advice but retains decision-making authority. Under an optimal contract, the principal should (i) never induce the agent ...
Strategic judgment proofing.
Dec 22, 2008; ... A liquidity-constrained entrepreneur raises capital to finance a business activity that may harm bystanders. The entrepreneur raises senior (secured) debt to shield assets from the tort victims in bankruptcy. For a fixed level of borrowing, senior debt creates better incentives for ...
Entry and regulation: evidence from health care professions.
Dec 22, 2008; ... In many countries, pharmacies receive high regulated markups and are protected from competition through geographic entry restrictions. We develop an empirical entry model for pharmacies and physicians with two features: entry restrictions and strategic complementarities. We find that the ...
Communicating quality: a unified model of disclosure and signalling.
Dec 22, 2008; ... Firms communicate product quality to consumers through a variety of channels. Economic models of such communication take two alternative forms when quality is exogenous: (i) disclosure of quality through a credible direct claim; or (ii) signalling of quality via producer actions that ...
Production targets.
Dec 22, 2008; ... We analyze a dynamic model of quantity competition, where firms continuously adjust their quantity targets, but incur convex adjustment costs when they do so. Quantity targets serve as a partial commitment device and, in equilibrium, follow a hump-shaped pattern. The final equilibrium is ...
Bidding rings and the winner's curse.
Dec 22, 2008; ... This article extends the theory of legal cartels to affiliated private value and common value environments. We show that efficient collusion is always possible in private value environments, but may not be in common value environments with a binding reserve price. In the latter case, ...
Price-increasing competition.
Dec 22, 2008; ... In a discrete choice model of product differentiation, the symmetric duopoly price may be lower than, equal to, or higher than the single-product monopoly price. Whereas the market share effect encourages a duopolist to charge less than the monopoly price because a duopolist serves fewer ...
Specific knowledge and performance measurement.(Column)
Dec 22, 2008; ... I examine optimal incentives and performance measurement in a model where an agent has specific knowledge (in the sense of Jensen and Meckling) about the consequences of his actions for the principal. Contracts can be based both on "input" measures related to the agent's actions and an ...
Trade costs and multimarket collusion.
Dec 22, 2008; ... Contrary to conventional wisdom, this article argues that trade liberalization may facilitate collusion and reduce welfare. With the help of a duopoly model in which firms interact repeatedly in multiple markets, we first show that, if trade costs (i.e., tariffs/transport costs) and ...
Entrepreneurs and new ideas.
Dec 22, 2008; ... We study how early-stage new ideas are turned into successful businesses. Even promising ideas can be unprofitable if they fail on one dimension, such as technical feasibility, correspondence to market demand, legality, or patentability. To screen good ideas, the entrepreneur needs to hire ...
Academic freedom, private-sector focus, and the process of innovation.
Sep 22, 2008; ... We develop a model that clarifies the respective advantages and disadvantages of academic and private-sector research. Rather than relying on lack of appropriability or spillovers to generate a rationale for academic research, we emphasize control-rights considerations, and argue that the ...