My thesis examines firm outcomes in markets with search frictions in order to help us better understand oligopolistic competition and resource allocation.
The thesis consists of three papers, and each paper focus on a specific research question.
The first paper studies the effect of unobservable heterogeneity in preferences on equilibrium prices in product markets with search frictions.
The second paper investigates empirically the characteristics of prices and dynamic behavior of stores in Norwegian retail markets, and tries to estimate the importance of store heterogeneity for the variation in prices.
The last paper studies the optimal economic governance of vertical relationships when contracts are incomplete and the input market is decentralized.
These papers are related in that they address the determinants of contracts in decentralized markets.