Three essays in microeconomics: Uncertain innovation in the presence of network externalities. Copyleft: An R&D game with network externalities. Imperfect recall in a model of search

This thesis examines some issues in industrial organization and game theory. Chapter 1 analyzes a situation with two firms competing in a market with network externalities where there is uncertain technological progress. It shows how firms share the market by strategically choosing their prices before a firm succeeds in getting an innovation. If the firms are patient but the probability of innovation is small then the firm with the bigger advantage sells to all the consumers in the absence of innovation. If however patient firms expect innovation with a high probability then so long as neither firm has a very big advantage both firms share the market until the innovation occurs.; Chapter 2 models a firm's decision to make its technology available to others for a fee. A firm with a lower license fee has a less proprietary technology, i.e., is "more copyleft". In a market with an incumbent and a potential entrant we show that if the network advantage of the incumbent is small then the incumbent chooses to be more copyleft than the entrant. When the network advantage is large the entrant chooses to be more copyleft. If the incumbent's network advantage is very large, it can make monopoly profits. For a slightly smaller network advantage the incumbent is not able to make monopoly profits but is still able to restrict the entrant to zero output. If the network advantage is very small then both firms produce positive amounts.; In chapter 3 we demonstrate that the tools developed for the analysis of perfect rationality may not give very reasonable or intuitive results when analyzing departures from perfect rationality. This chapter studies the implication of imperfect recall using both traditional game-theoretic methods and by having machines perform the job of the agent and compares the two results. The players are modelled as having memory constraints. The implication of different limits on memory for the players in a simple interactive search model are studied.