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Set-asides and subsidies are used extensively in government procurement and natural resource sales. We analyze these policies in an empirical model of Forest Service timber auctions. The model fits the data well both in-sample and out-of-sample. Our estimates suggest that restricting entry to small businesses substantially reduces efficiency and revenue, although it does increase small business participation. A bidding subsidy for small business appears to be more effective at achieving distributional goals, increasing revenue and eliminating almost all of the efficiency loss. A small business bidding subsidy also increases the average profits of both large and small firms, compared to a set-aside policy. We explain these findings by connecting to the theory of optimal auction design.

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This paper considers a dynamic model of the evolution of open source software projects,focusing on the evolution of quality, contributing programmers, and users who contributecustomer support to other users. Programmers who have used open source software aremotivated by reciprocal altruism to publish their own improvements. The evolution ofthe open-source project depends on the form of the altruistic benefits: in a base case theproject grows to a steady-state size from any initial condition; whereas adding a need forcustomer support makes zero-quality a locally absorbing state. We also analyze competitionby commercial firms with OSS projects. Optimal pricing policies again vary: in some casesthe commercial firm will set low prices when the open-source project is small; in other casesit mostly waits until the open-source project has matured.

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We investigate if the actions by individuals in creating effective new innovations are aligned with the reuse of those innovations by others in a private-collective software development context. This relationship is studied in the setting of eleven "wiki-like" programming contests, where contest submissions are open for reuse by others, each involving more than one hundred contributors and several thousand attempts to generate, over a one-week period, the "best" software solution to a difficult programming challenge. We discuss the implications of these findings in light of the literature on private-collective innovation with an emphasis on the importance of considering both individual and community perspectives as they relate to knowledge creation, reuse and recombination for innovation.

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We describe a method for identifying "typosquatting", the intentional registration of misspellings of popular website addresses. Using regression analysis, we find that websites in categories with higher pay-per-click ad prices face more typosquatting registrations, indicating that ad platforms such as Google AdWords exacerbate typosquatting. However, our investigations also confirm the feasibility of significantly reducing typosquatting. We find that typosquatting is highly concentrated: Of typo domains showing Google ads, 63% use one of five advertising IDs, and some large name servers host typosquatting domains as much as four times as often as the web as a whole.

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This paper develops a new model where online advertiser bids apply to many user queries, while the quality scores and the set of competing advertisements may vary from query to query. In contrast to existing models that ignore uncertainty, which produce multiplicity of equilibria, we provide sufficient conditions for existence and uniqueness of equilibria. In addition, we propose a homotopy-based method for computing equilibria given advertiser valuations and the distribution of uncertainty. We then propose a structural econometric model. Finally, we apply the model to historical data for several keywords.

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This paper examines a model in which advertisers bid for "sponsored-link" positions on a search engine. The value advertisers derive from each position is endogenized as coming from sales to a population of consumers who make rational inferences about firm qualities and search optimally. Consumer search strategies, equilibrium bidding, and the welfare benefits of position auctions are analyzed. Implications for reserve prices and a number of other auction design questions are discussed.

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Better information technology makes a quantifiable, positive difference in business performance. The core finding of this multi-country research study from Keystone Strategy, Inc., sponsored by Microsoft Corporation and conducted under the direction of Professor Marco Iansiti of the Harvard Business School.

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Keystone Strategy research shows a high correlation between IT capability and profitable business growth. Firms that build high capability IT systems grow faster than firms that do not, and do so while increasing both revenue and profit.

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Due to an increasingly distributed industry structure, the focus of competition is shifting away from the management of internal resources, to the management and influence of assets that are outside the direct ownership and control of the firm. In this paper, we introduce a framework for studying and understanding the management of innovation and operations in business ecosystems.

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