| In this dissertation I use Microeconomic theory to study firms' behavior. Chapter One introduces the motivations and main findings of this dissertation.; Chapter Two studies the issue of information provision through advertisement when markets are segmented and consumers' price information is incomplete. Firms compete in prices and advertising strategies for consumers with transportation costs. High advertising costs contribute to market segmentation. Low advertising costs promote price competition among firms and improves consumer welfare.; Chapter Three also investigates market power as a result of consumers' switching costs. A potential entrant can offer a new product bundled with an existing product to compensate consumers for their switching cost. If the primary market is competitive, bundling simply plays the role of price discrimination, and it does not dominate unbundled sales in the process of entry. If the entrant has market power in the primary market, then bundling also plays the role of leveraging market power and it dominates unbundled sales.; The market for electric power generation has been opened to competition in recent years. Chapter Four looks at issues involved in the deregulated electricity market. By comparing the performance of the competitive market with the social optimum, we identify the conditions under which market equilibrium generates socially efficient levels of electric power.; Chapter Two to Four investigate the strategic behavior among firms. Chapter Five studies the interaction between firms and unemployed workers in a frictional labor market. We set up an asymmetric job auction model, where two types of workers apply for two types of job openings by bidding in auctions and firms hire the applicant offering them the most profits. The job auction model internalizes the determination of the share of surplus from a match, therefore endogenously generates incentives for an efficient division of the matching surplus. Microeconomic foundation for competitive auctions is also discussed in this chapter. |
