For path-breaking insights on how prices can guide the efficient allocation of resources and how innovation and investment can spur economic growth, Adam Smith is justly renowned. He was, however, well aware of problems posed by market dominance—specifically in banking and, more generally, wherever getting to the scale that delivers increasing returns leads to monopolistic behaviour. For the historical record, we draw on the recent wide-ranging survey by Acemoglu and Johnson on how the benefits of innovation have been spread across society since the Industrial Revolution. We also consider these issues in the context of geo-political competition.

This paper examines green alliances between environmental groups (EGs) and polluting firms, which have become more common in the last decades, and analyzes how they affect policy design. We first show that the activities of regulators and EGs are strategic substitutes, giving rise to free-riding incentives on both agents. Nonetheless, the presence of the EG yields smaller welfare benefits when firms are subject to regulation than when they are not. In addition, the introduction of environmental policy yields large welfare gains when the EG is absent but small benefits when the EG is already present.

This paper analyzes optimal nonlinear pricing for a monopoly supplying a bundle of a commodity and a related service, where the consumers' private information is captured by scalar variable. With constant marginal costs, we find the standard result where the good and the service in the bundle are lower than separately. However, under the increasing cost assumption, when the degree of the complementarity becomes sufficiently high, the marginal price of separate good is lower than the good price in the bundle. Contrary to Martimort (1992), when good and service are perfectly complementary, we can not conclude that it is costly for consumers to sign two contracts from different shops than to buy the bundle. Because of asymmetric properties in the utility function, profitability result of bundling strategy depends, on the one hand, on the degree of complementarity between commodity and related service and on the other hand, on the degree of the optional service.

In this article, we consider a demand model for a durable good with unknown quality. The quality of the good is uncertain in the sense that the consumer ignores (ex ante) whether the good will break down or not, higher quality implying a higher probability of survival. Taking into account this uncertainty around the quality, we show that the demand for quality can, paradoxically, decrease when consumers are more risk averse. We prove that this risk aversion effect can disturb the second-order price discrimination policies applied by some firms. We reveal the link between quality demand and self-protection theory.

We propose a model representing a newspaper producer supplying a product which can be acquired by the readers either every day per one unit at a time, or by subscription. The population of potential buyers is differentiated according to the frequency at which they want to read the newspaper. First we identify the optimal pricing policy, namely, the optimal price for issues sold per unit at the newsstand, as well as the optimal subscription fee. Then we show that it is always more profitable to supply the market with both possibilities, – free sale purchase and subscription –, than to concentrate the sales on either of these alternatives.

An inductive procedure is adopted to evaluate the behaviour of a multiproduct profit seeking monopolist vis à vis that of a social planner, in a model where there is a continuum of consumers characterized by different marginal willingness to pay for quality. When the market is completely covered, the monopolist undersupplies all qualities as long as their number is finite. When quality becomes continuous, the richest consumer is provided with the socially optimal quality. Under the alternative assumption of partial market coverage, the monopolist supplies the same qualities as the social planner, restricting though total output. Finally, it turns out that, for a given number of varieties, under partial market coverage the monopolist can make at least as good as under full market coverage, so that she prefers to distort quantity rather than quality.