Date of Award

Spring 1-1-2015

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Yongmin Chen

Second Advisor

Jinhyuk Kim

Third Advisor

Keith Maskus

Fourth Advisor

Oleg Baranov

Fifth Advisor

Chuan He

Abstract

This dissertation studies competition, innovation, and search in durable-goods markets. Specifically, it investigates three questions: First, how does counterfeit competition affect a branded firms profit and social welfare in a durable-goods market? Second, how does an imitators entry impact the durable-goods producers R&D decision when consumers care about social status? And third, how are firms' profits affected by their positions when consumers search for a durable good sequentially?

The second chapter explores why deceptive counterfeit competition may increase a branded firm's profit and total welfare. The reason is that counterfeits enable the branded firm to maintain a high price, which alleviates the time-inconsistency problem of a durable goods monopolist. The third chapter shows that, for conspicuous goods of durable nature, entry of imitators may increase the incumbent's R&D incentive. The result provides a theoretical justification for the weak protection of intellectual property in the fashion industry. The fourth chapter finds that when ex-ante heterogeneous consumers search for a durable good sequentially, a less prominent firm may earn a higher profit, because search cost enables the firm to cherry-pick high-value customers and commit to a high price.

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