I study price setting within a network of interconnected monopolists. Some firms possess stronger commitment or bargaining power than others, enabling them to influence the pricing decisions of other firms. While it is well-understood that multiple marginalization reduces both total profits and social welfare, I show that strategic interactions within the network exacerbate the marginalization problem. Individual profits are proportional to a new measure of network centrality, defined by the equilibrium characterization. The results underscore the importance of network structure in policy considerations, such as mergers or trade policies.

Before purchase, a buyer of an experience good learns about the product's fit using various information sources, including some of which the seller may be unaware of. The buyer, however, can conclusively learn the fit only after purchasing and trying out the product. We show that the seller can use a simple mechanism to best take advantage of the buyer's post-purchase learning to maximize his guaranteed-profit. We show that this mechanism combines a generous refund, which performs well when the buyer is relatively informed, with non-refundable random discounts, which work well when the buyer is relatively uninformed. JEL: D82, C79, D42

This article studies how a government should distribute funds among research institutions and how it should allocate them to basic and applied research. Institutions differ in reputation and efficiency, and have an information advantage. The government should award funding for basic research to induce the most productive institutions to carry out more applied research than they would like. Institutions with better reputation do more research than otherwise identical ones, and applied research is inefficiently concentrated in the most efficient high reputation institutions. The article provides theoretical support for a dual channel funding mechanism, but not for full economic costing.