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I introduce a computable dynamic equilibrium model of the pharmaceutical industry, parameterize it using industry facts, and use it to predict what happens if the United States adopts price controls or one or more non‐U.S. countries abandon their controls. The model generates implications for firm value, research and development (R&D), the flow of new drugs, and consumer welfare. I highlight the sensitivity of the results to alternative assumptions about R&D costs, market size, technological opportunities, consumer heterogeneity, the extent to which choices internalize prices, barriers to entry in R&D, the extent to which R&D outcomes are correlated, and the nature of the controls.

This paper analyzes the impact of vertical integration on investment and other strategies in a dynamic common agency framework. Movie distribution is used as a motivating example. The model matches several facts about movie distribution; distributors avoid head-to-head new hit releases, hits have longer runs than flops, and distributors receive the lion?s share of value generated by hits. Welfare comparisons show that integration is privately profitable and may improve social welfare even though it reduces industry profits. The effects of integration on strategies and welfare depend critically on how integration affects the bargaining power of the non-integrated firm.

Nations differ in their tolerance for costs of fighting and in their willingness to make concessions. We use a bargaining model of war to analyze these sensitivities. Incentives created by heightened sensitivity to costs often—but not always—contradict those created by heightened sensitivity to making concessions. The results establish the effects of the two sensitivities on key conflict variables such as the frequency with which nations initiate conflicts, are targeted, engage in long or short wars, or receive favorable or unfavorable settlements. It is often asserted that democratic leaders are more sensitive to costs and conflict outcomes than autocrats. If so, then our model suggests that when the two sensitivities reinforce each other, empirical work will yield robust effects of regime type on conflict variables, but when the two sensitivities counter each other, estimated effects will be more ambiguous unless researchers consider which sensitivity dominates.

Recent research suggests that democracies have advantages and disadvantages in wars. Democracies are more likely to win the wars they initiate and the ones in which they are targeted. Wars initiated by democracies are also uniformly shorter and less costly than wars initiated by nondemocracies. However, democracies are also less likely to continue fighting and less likely to win as war drags on. Democracies are also particularly likely to be targeted. We present a bargaining model that reconciles these divergent findings. The model explains why democracies are more likely to win but are also more likely to settle and more likely to be targeted than other types of regimes. The model's explanation of these facts differs in important ways from existing explanations. The model also suggests several new hypotheses relating regime type to the terms of settlement and the onset of war.

In high-tech industries, one important method of diffusion is through employee mobility: many of the entering firms are started by employees from incumbent firms using some of their former employers' technological know-how. This paper explores the effect of incorporating this mechanism in a general industry framework by allowing employees to imitate their employers' know-how. The equilibrium is Pareto optimal since the employees 'pay' for the possibility of learning their employers' know-how. The model's implications are consistent with data from the rigid disk drive industry. These implications concern the effects of know-how on firm formation and survival.