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We develop a simple model in which there is both interfirm (or intraproduct) and intrafirm (or interproduct) competition. The purpose is to develop a classificatoy framework in order to understand product‐range or diversification decisions alongside conventional competition. The equilibrium...
This paper deals with the strategic role of the temporal dimension of contracts in a duopoly market. Is it better for a firm to sign long‐term incentive contracts with managers or short‐term contracts? For the linear case, with strategic substitutes (complements) in the product market, the...
Why is it so common for the seller to provide guarantees that say “Satisfaction guaranteed or your money back” along with the sale of a product? Newly introduced goods and mail‐ordered products are usually sold with such guarantees. In honoring money‐back guarantees, why is it a common business...
This paper develops a theory of capital structure based on the attempts of a firm to alleviate a holdup problem that arises in its bilateral relationship with a buyer. It is shown that by issuing debt to outsiders, the firm can improve its ex post bargaining position vis‐a‐vis the buyer and...
Whether vertical integration between a downstream oligopolist and an upstream oligopolist is profitable for an integrated pair of firms is shown to depend on whether one means by this that profits increase no matter what other firms do, that all integrated firms are better off when all firms are...
This paper considers the incentives of a firm with power in a market for one good to tie in the sale of a complementary good even though the complementary good is produced in a zero profit market. If the zero‐profit price of the tied good is greater than the marginal cost (which occurs for...
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