"Price Escalation in Service Provision" (with Hans Gersbach), 2024. Revise & resubmit Journal of Economics & Management Strategy
We examine Bertrand competition in price and quality of services when suppliers cannot price discriminate between different types of customers. We show that the suppliers specialize in different customer types to soften competition. The suppliers provide first-best quality but there is a continuum of equilibria in prices ranging from zero profit level up to one customer type's valuation. A price cap can protect customers from escalating prices and select a low price equilibrium. Introducing a public supplier is an alternative remedy to price escalation. Our analysis also suggests that banning price discrimination for fairness reasons, when it is feasible, may backfire.
Cooperation and Asymmetries in Common-Pool Resources
Climate Change and Incentives to Cooperate in Local Commons