This paper analyzes a monopolist that markets successive generations of new and improving nondurable products. Prices, research intensity, and product innovations are derived as sequential equilibrium outcomes to a dynamic game with incomplete information. Asymmetric information is an important feature of the model. The monopolist is fully aware of the current product's quality, as are consumers who have tried it. However, the beliefs of other people are characterized by a probability distribution that depends on the monopolist's marketing strategy and the product's popularity. The analysis illustrates a new context in which price signaling might serve as a mechanism for ensuring that only high-quality products are marketed. More important, it shows how product life cycles are generated in the absence of signaling and how a reputation for producing high-quality goods becomes established in such cases.

This paper analyzes a monopolist that markets successive generations of new and improving nondurable products. Prices, research intensity, and product innovations are derived as sequential equilibrium outcomes to a dynamic game with incomplete information. Asymmetric information is an important feature of the model. The monopolist is fully aware of the current product's quality, as are consumers who have tried it. However, the beliefs of other people are characterized by a probability distribution that depends on the monopolist's marketing strategy and the product's popularity. The analysis illustrates a new context in which price signaling might serve as a mechanism for ensuring that only high-quality products are marketed. More important, it shows how product life cycles are generated in the absence of signaling and how a reputation for producing high-quality goods becomes established in such cases.

[A theoretical model that explicitly incorporates the relation between investment banker and auditor is developed to provide a framework for testing the effect of auditor selection in the initial market for unseasoned equity issues. The theoretical model generates a number of testable propositions. Consistent with stylized facts, the theory suggests that high reputation investment bankers will more frequently use high reputation auditors, and that both investment banker and auditor reputation help to reduce underpricing. As either reputational variable increases, the model predicts that the impact of the other variable will diminish. The empirical results confirm this more complex relation. The structure of the model documented in this research may explain the difficulties of previous studies in identifying an empirical relation between auditor reputation and underpricing.]

This paper examines household fertility and female labor supply over the life cycle. We investigate how maternal time inputs, market expenditures on offspring, as well as the benefits they yield their parents, vary with ages of offspring, and influence female labor supply and contraceptive behavior. Our econometric framework combines a female labor supply model and a contraceptive choice index function. It also accounts for the fact that conceptions are not perfectly controllable events. Using longitudinal data on married couples from the Panel Study of Income Dynamics, we estimate these equations and test alternative specifications of the technologies governing chld care. Our findings suggest that while parents cannot perfectly control conceptions, variations in child care costs do affect the life cycle spacing of births. Furthermore, our results demonstrate the gains of modelling the linkages between female labor supply and fertility behavior at the household level.

A theoretical model that explicitly Incorporates the relation between investment banker and auditor is developed to provide a framework for testing the effect of auditor selection in the Initial market for unseasoned equity Issues. The theoretical model generates a number of testable propositions. Consistent with stylized facts, the theory suggests that high reputation Investment bankers will more frequently use high reputation auditors, and that both Investment banker and auditor reputation help to reduce underpricing. As either reputational variable Increases, the model predicts that the Impact of the other variable will diminish. The empirical results confirm this more complex relation. The structure of the model documented in this research may explain the difficulties of previous studies in Identifying an empirical relation between auditor reputation and underpricing.