The recent rapid growth of the Internet as a medium of communication and commerce, combined with the development of sophisticated software tools, are to a large extent responsible for producing a new kind of information: databases with detailed records about consumers’ preferences. These databases have become part of a Þrm’s assets, and as such they can be sold to competitors. This possibility has raised numerous concerns from consumer privacy advocates and regulators, who have entered into a heated debate with business groups and industry associations about whether the practice of customer information sharing should be banned, regulated, or left unchecked. This paper investigates the incentives of rival Þrms to share their customer-speciÞc information and evaluates the welfare implications if such exchanges are banned, in the context of a perfect price discrimination model.

This study examines spatial variation in the price and accessibility (if fast food across a major urban area. We use novel data on the price ol a rcpresentalivc last-fcMxl mciti and Ihc location of fasi-ftxKi restaurants belonging lo one of three major chains in ihe Disiriet of Columbia and if.s surrounding suburbs. These dala are used lo lest a structural model of spiifial (.-ompcliliiin. The results of this study are easily itilerpreted and compared with a pasf;inalysis. We lind dial spuiial differences in costs and demand conditions drive variation in ihc nutnber of firms operating in a market, which in tum affects prices. JKL Clas.siticalion: L l l. LKI. 1)43 1.

This paper explores the implications of price-dependent demand in spatial models of product differentiation. We introduce consumers with a quasi-linear utility function in the framework of the Salop (1979) model. We show that the so-called excess entry theorem relies critically on the assumption of completely inelastic demand. Our model is able to produce excessive, insufficient, or optimal product variety. A proof for the existence and uniqueness of symmetric equilibrium when price elasticity of demand is increasing in price is also provided.

Behaviour-based price discrimination is typically analysed in a framework characterised by inelastic demand. This paper provides a first assessment of the role of elastic demand on the competitive ef-fects of behaviour-based price discrimination. Our results show that if demand is elastic enough, behaviour-based price discrimination leads to demand expansion which has a positive effect on overall welfare. JEL: D43, L13.

A note on the excess entry theorem in spatial

The Hotelling model with finite consumer reservation price is, in its various forms, perhaps the canonical model of horizontal product differentiation. Yet the following key aspects of this model are little understood: (i) the existence of asymmetric price equilibria when consumers have unit demands and (ii) for a very broad set of model specifications, the non-monotonicity of price as a function of consumers ’ transportation cost, i.e., the degree of product differentiation in the market. We provide a complete characterization of the asymmetric equilibria, show that they exist for a comparatively “wide ” range of markets, and argue that their existence is robust to various extensions of the prototype model. Introducing elasticity into consumer demands suppresses the kink in the firms ’ demand functions and ensures the uniqueness (and symmetry) of the price equilibrium. However, the key perverse comparative static of the symmetric kinked equilibrium, decreasing price as a function of transport cost, survives relaxation of the unit-demand assumption. Indeed the symmetric kinked equilibrium of the unit-demand case is a special case of a general but largely unexplored set of equilibria in the Hotelling model we call weak duopoly. Weak-duopoly equilibria exist for intermediate values of transportation cost for a very broad class of consumer demands.

Oligopoly models are usually analyzed in the context of two firms, anticipating that market outcomes would be qualitatively similar in the case of three or more firms. The literature on Hotelling’s location-then-price competition is not an exception. In this paper, we show that the main finding of brand bunching in Hotelling’s duopoly no longer holds once three or more firms are allowed to enter the market. That is, in oligopoly with three or more firms, firms proliferate brands.

copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. 1 We use an extended partial equilibrium trade model to derive optimal environmental policy responses to tariff reduction requirements and assess the impact of such policies on the welfare of trading partners. We find that countries which attribute preferential political weights to farmers ’ welfare have an incentive to implement environmental policies that deviate from the Pigouvian solution – even if production is not de facto linked to environmental externalities. We clarify the conditions under which trading partners do not gain from unilateral trade liberalisation if trade concessions are accompanied by strategic environmental policy changes. We postulate a role for the WTO in overseeing the process of domestic policy formulation.

In this dissertation I report three doctoral research projects: the appli-cation of imperfect certification in markets with asymmetric information, the impact of elastic demand on market supplied product variety in dif-ferentiated product markets and a microeconomic analysis of gift giving when individuals are concerned with social approval (face). It consists of six chapters including a general introduction, four research papers and an outlook for further projects. Chapter 2 proposes a model for a certification market with an imperfect testing technology. Such a technology only assures that whenever two products are tested the higher quality product is more likely to pass than the lower quality one. When only one certifier with such testing technol-ogy is present in the market, it is found that this monopoly certifier can be completely ignored in equilibrium, in contrast to the prediction of a model with perfect testing technology. A separating equilibrium is also

This dissertation draws on research I undertook during the time in which