| The first chapter analyzes the supply of informative advertising by a monopolist when perfect targeting is available. I show that such technology might not be socially desirable. Although targeting saves advertising costs and benefits the monopolist, it also raises the market price which, in turn, might lower consumer surplus. Thus, if the cost of advertising is low and consumers' valuation of the good is high, then the higher efficiency of targeting might not compensate for the higher price and society might be better off with random advertising. Moreover, the monopolist always undersupplies advertising. Consumer Associations can mitigate this distortion by advertising through Consumer Reports, although the first best will not be achieved.; Chapter 2 studies cooperation between rivals and the regulation of such cooperation. The cooperation consists in the transfer of intermediate inputs from an efficient duopolistic firm to an inefficient one. I find that under complete information cooperation is desirable from both a social and a private perspective. By contrast, if firms have private information, then cooperation might be used as a device to collude. The monopolization problem can be solved by constraining firms from using negative lump sum transfers. However, if demand is high enough, then the optimal regulatory policy is to further constrain the set of cooperation contracts to a positive fixed fee. Finally, I show that in the short run, where the efficient firm is capacity constrained, cooperation lowers welfare.; Chapter 3 integrates both a neoclassical and an incomplete contracting approach into a single framework in order to analyze vertical disintegration in a duopoly, the distribution of ownership and, finally, their antitrust implications. I find that both theories complement each other. Thus, disintegration depends on demand and cost conditions, whereas ownership depends mainly on specific investments and reintegration costs. I also find that disintegration raises social welfare, whereas changes in ownership might be used as a device to collude. However, if the disintegration contract is constrained to a positive fixed fee, then changes in ownership always raise welfare. |
