Abstract
Two horizontally differentiated firms compete for a consumer with unit demand who sequentially learns about his valuation for each firm's product. Each firm commits to a menu of option contracts in which the consumer pays an upfront fee for the right to buy in the future at a specified strike price. Before choosing the contracts, the consumer has a private signal about his valuations. After contracting, the consumer learns his valuations and then chooses which option to exercise. We characterize the equilibria of this game, with and without exclusive contracts. Our model rationalizes subscription tiers. Relative to the monopoly case, competition increases the strike prices. Exclusivity harms the consumer if and only if his initial signal is sufficiently informative.
The seminar will be held in room 1249 (12th floor) at Eilert Sundts Hus. The address is Moltke Moes vei 31.