Suchergebnisse

I propose a framework in which asymmetric multiproduct retailers compete for one-stop shoppers who have biased beliefs about their future purchase probabilities (and so make unplanned purchases). One firm carries a full portfolio of products while the other carries an incomplete but endogenous one. Using this framework, I examine the phenomenon of loss leading, the optimal product portfolio of the smaller firm, and the effects of banning loss leading. Among other results, I show that there is a nonpredatory (and possibly procompetitive) justification for the observation that such larger firms may charge below cost on the core product lines of their smaller rivals. (JEL D11, D21, D83, L13, L25, L71, L81)

I examine how the increasing ability of firms to target their ads influences market outcomes when consumers have access to advertising‐avoidance tools. Although firms generally benefit from improved targeting, consumers need not. I also show that there may be too little blocking of ads in equilibrium and consider the role of targeted advertising when niche firms compete against mass‐market firms.

If consumer valuations change over time, then secondary‐market frictions may raise monopoly profits and cause durability to be distorted away from the cost‐minimizing level. A monopolist who favors such frictions overinvests in durability, but planned obsolescence instead may be preferred when market frictions exist but a monopolist wishes they did not. Evidence from the book market is presented.

AbstractWe investigate mergers in markets where quality differences between products are central and firms may reposition their product lines by adding or removing products of different qualities following a merger. Such mergers are materially different from those studied in the existing literature. Mergers without synergies may exhibit a product‐mix effect which raises consumer surplus, but only when the pre‐merger industry structure satisfies certain observable features. Post‐merger synergies may lower consumer surplus. The level of, and changes in, the Herfindahl–Hirschman Index may give a misleading assessment of how a merger affects consumers. A merger may benefit some outsiders but harm others.