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I generalize the workhorse model of network competition to include income effects in demand. Empirical work has shown income effects to be positive and statistically significant. Income effects deliver theoretical results consistent with regulatory concern about excessive termination rates: unregulated network operators competing in nondiscriminatory retail contracts negotiate termination rates above cost for any positive income effect. This also holds when operators discriminate between on‐net and off‐net calls if networks are differentiated. Operators profit from increasing termination rates above cost under second‐degree price discrimination if a sufficient share of consumers prefer on‐net/off‐net contracts and their subscription demand is relatively inelastic.

This paper presents a model of strategic positioning during an election campagin in which candidates use results from opinion polls to extract information about voter preferences. It is shown that the distance between policy announcements decreases over the course of the campaign: candidates announce initial policies at either extreme of the political spectrum and commit to moderate final policies. An underdog effect arises: the difference in candidate popularity decreases as the campaign evolves. A public opinion poll constitutes a Pareto improvement if final policies are expected to become more moderate after the introduction of the poll.

We consider an economy with two language groups, where only agents who share a language can produce together. Schooling enhances the productivity of students and may modify their language endowment. Under a unilingual system, the language of the politically dominant group is the only language of instruction, and the members of the politically dominated group who attend school shift language. Instead, under a bilingual system, the members of the dominated group who attend school become bilingual. The dominant group chooses the education system, and then individuals decide whether to attend school. While agents do not get utility from speaking their own language, we show that a language conflict of the expected type endogenously arises in the choice between a unilingual and a bilingual system. Democracy (majority rule) always leads to the implementation of the socially optimal education system, while the unilingual system is too often implemented under minority rule. In the presence of productivity spillovers, there may be unanimity for unilingualism, even if this system is assumed to be technologically inferior. The model is consistent with evidence from Finland in 1919 and France in 1863, showing that the choice of bilingualism in education may not be related to the size of language groups.

We analyse voter turnout as a function of referendum types. An advisory referendum produces advice that a legislature may or may not take into account when choosing between two alternatives, whereas a binding referendum generates a decisive decision. In theory, voter turnout should be higher under binding than advisory referendums, higher in small than large electorates and higher in close than less close referendums. These predictions are corroborated by evidence from 230 local referendums in Norway. For example, a shift from an advisory to a semi-binding referendum leads to an average increase in voter turnout by 11.5 percentage points.

We construct a model in which a number of equally powerful ethnic groups compete for power by engaging in civil war. In non-redistributive equilibrium, ethnically homogeneous and ethnically diverse countries face a lower probability of civil war than countries with a moderate degree of ethnic diversity. The likelihood of conflict is maximized when there are two ethnic groups. When rent-extraction possibilities are not too big and society sufficiently ethnically homogeneous, there also exists a pacific equilibrium path sustained by redistribution from the ruling group to the out-of-power groups.