In many countries throughout the world, regulators are struggling to determine whether and how to introduce competition into regulated industries. This essay exam- ines the complexities involved in the liberalization process. While stressing the impor- tance of case-specific analyses, this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies.

This paper extends the standard model of bundling to allow products to be substitutes and for products to be supplied by separate sellers. Whether integrated or separate, …rms have an incentive to introduce bundling discounts when demand for the bundle is elastic relative to demand for stand-alone products. Separate …rms often have a unilateral incentive to o¤er inter-…rm bundle discounts, although this depends on the detailed form of substitutability. Bundle discounts mitigate the innate substitutability of products, which can relax competition (...) between …rms and induce an integrated …rm to lower all of its prices when it follows a bundling strategy. (shrink)

A common sales tactic is for a seller to encourage a potential customer to make her purchase decision quickly. We consider a market with sequential consumer search in which firms often encourage first-time visitors to buy immediately, either by making an “exploding offer” (which permits no return once the consumer leaves) or by offering a “buy-now discount” (which makes the price paid for immediate purchase lower than the regular price). Prices often increase when these policies are used. If firms cannot (...) commit to their sales policy, the outcome depends on whether consumer incur an intrinsic cost of returning to a firm: if there is no such return cost, it is often an equilibrium for firms to offer a uniform price to both first-time and returning visitors; if the return cost is positive, however, firms are forced to make exploding offers. (shrink)