Competitive Imperfect Price Discrimination and Market Power

Two duopolists compete on price in the market for a homogeneous product. They can “profile” consumers, that is, identify their valuations with some probability. If both firms can profile consumers but with different abilities, then they achieve positive expected profits at equilibrium. This provides a rationale for firms to (partially and unequally) share data about consumers or for data brokers to sell different customer analytics to competing firms. Consumers prefer that both firms profile exactly the same set of consumers or that only one firm profiles consumers as this entails marginal cost pricing (so does a policy requiring list prices to be public). Otherwise, more protective privacy regulations have ambiguous effects on consumer surplus

Attack-prevention and damage-control investments in cybersecurity

This paper examines investments in cybersecurity made by users and software providers with a focus on the latter's concerning attack prevention and damage control. I show that full liability, whereby the provider is liable for all damage, is inefficient, owing namely to underinvestment in attack prevention and overinvestment in damage control. On the other hand, the joint use of an optimal standard, which establishes a minimum compliance framework, and partial liability can restore efficiency. Implications for cybersecurity regulation and software versioning are discussed

Switching Costs in Two-Sided Markets

In many markets, there are switching costs and network effects. Yet the literature generally deals with them separately. This paper bridges the gap by analyzing their interaction (or ‘indirect bargain’) in a dynamic two-sided market. It shows that in the symmetric equilibrium, the classic result that the first-period price is U-shaped in switching costs does not emerge, but instead switching costs always intensify the first-period price competition. Moreover, an increase in switching costs on one side decreases the first-period price on the other side. Policies that ignore these effects may overestimate the extent to which switching costs can reduce welfare

Ex Ante and Ex Post Investments in Cybersecurity

This paper develops a theory of sequential investments in cybersecurity in which the software vendor can invest ex ante and ex post. The regulator can use safety standards and liability rules as means of increasing security. A standard is a minimum level of safety, and a liability rule states the amount of damage each party is liable for. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post because the software vendor does not suffer the full costs of the society in case of security failure. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only the firms, but also the enterprises to invest in security. I also discuss the effect of network externality and explain why firms engage in "vaporware"

Ex Ante and Ex Post Investments in Cybersecurity

This paper develops a theory of sequential investments in cybersecurity in which the software vendor can invest ex ante and ex post. The regulator can use safety standards and liability rules as means of increasing security. A standard is a minimum level of safety, and a liability rule states the amount of damage each party is liable for. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post because the software vendor does not suffer the full costs of the society in case of security failure. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only the firms, but also the enterprises to invest in security. I also discuss the effect of network externality and explain why firms engage in "vaporware"

Dancing with Rivals: How does Platform’s Information Usage Benefit Independent Sellers?

Platforms greatly facilitate transactions between buyers and sellers. At the same time, this allows platforms to gather detailed information on transactions and tailor their strategies when introducing their own products that compete with independent sellers. Concerns have been raised that such an information advantage of the platforms can hurt sellers. To investigate the impact of information usage by platforms, we analyze a dynamic game-theoretic model where competing sellers trade via a platform that has access to information at various levels of granularity. We show that the usage of more detailed and individualized information by the platform can actually benefit sellers. This occurs as sellers compete less intensely, anticipating that the platform would take advantage of more individualized information to target the more successful sellers. The competition relaxing effect is particularly strong when sellers are close substitutes and face little demand uncertainty within their product category. In such cases, both the platform and sellers could benefit from more individualized information usage, but consumers may be hurt

Examining Whether AOSLO-Based Foveal Cone Metrics in Achromatopsia and Albinism Are Representative of Foveal Cone Structure

Purpose: Adaptive optics scanning light ophthalmoscopy (AOSLO) imaging in patients with achromatopsia (ACHM) and albinism is not always successful. Here, we tested whether optical coherence tomography (OCT) measures of foveal structure differed between patients for whom AOSLO images were either quantifiable or unquantifiable. Methods: The study included 166 subjects (84 with ACHM; 82 with albinism) with previously acquired OCT scans, AOSLO images, and best-corrected visual acuity (BCVA, if available). Foveal OCT scans were assessed for outer retinal structure, outer nuclear layer thickness, and hypoplasia. AOSLO images were graded as quantifiable if a peak cone density could be measured and/or usable if the location of peak density could be identified and the parafoveal mosaic was quantifiable. Results: Forty-nine percent of subjects with ACHM and 57% of subjects with albinism had quantifiable AOSLO images. Older age and better BCVA were found in subjects with quantifiable AOSLO images for both ACHM (P = 0.0214 and P = 0.0276, respectively) and albinism (P = 0.0073 and P < 0.0004, respectively). There was a significant trend between ellipsoid zone appearance and ability to quantify AOSLO (P = 0.0028). In albinism, OCT metrics of cone structure did not differ between groups. Conclusions: Previously reported AOSLO-based cone density measures in ACHM may not necessarily reflect the degree of remnant cone structure in these patients. Translational Relevance: Until AOSLO is successful in all patients with ACHM and albinism, the possibility of the reported data from a particular cohort not being representative of the entire population remains an important issue to consider when interpreting results from AOSLO studies

Current and Novel Inhibitors of HIV Protease

The design, development and clinical success of HIV protease inhibitors represent one of the most remarkable achievements of molecular medicine. This review describes all nine currently available FDA-approved protease inhibitors, discusses their pharmacokinetic properties, off-target activities, side-effects, and resistance profiles. The compounds in the various stages of clinical development are also introduced, as well as alternative approaches, aiming at other functional domains of HIV PR. The potential of these novel compounds to open new way to the rational drug design of human viruses is critically assessed