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I develop a general theory of monopoly pricing of networks. Platforms use insulating tariffs to avoid coordination failure, implementing any desired allocation. Profit maximization distorts in the spirit of A. Michael Spence (1975) by internalizing only network externalities to marginal users. Thus the empirical and prescriptive content of the popular Jean-Charles Rochet and Jean Tirole (2006) model of two-sided markets turns on the nature of user heterogeneity. I propose a more plausible, yet equally tractable, model of heterogeneity in which users differ in their income or scale. My approach provides a general measure of market power and helps predict the effects of price regulation and mergers. (JEL D42, D85, L14)

Although mutualisms are common in all ecological communities and have played key roles in the diversification of life, our current understanding of the evolution of cooperation applies mostly to social behavior within a species. A central question is whether mutualisms persist because hosts have evolved costly punishment of cheaters. Here, we use the economic theory of employment contracts to formulate and distinguish between two mechanisms that have been proposed to prevent cheating in host-symbiont mutualisms, partner fidelity feedback (PFF) and host sanctions (HS). Under PFF, positive feedback between host fitness and symbiont fitness is sufficient to prevent cheating; in contrast, HS posits the necessity of costly punishment to maintain mutualism. A coevolutionary model of mutualism finds that HS are unlikely to evolve de novo, and published data on legume-rhizobia and yucca-moth mutualisms are consistent with PFF and not with HS. Thus, in systems considered to be textbook cases of HS, we find poor support for the theory that hosts have evolved to punish cheating symbionts; instead, we show that even horizontally transmitted mutualisms can be stabilized via PFF. PFF theory may place previously underappreciated constraints on the evolution of mutualism and explain why punishment is far from ubiquitous in nature.evolution of cooperation | punishment | symbiosis | partner fidelity feedback | host sanctions

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Using only information local to the pre-merger equilibrium, we derive approximations of the expected changes in prices and welfare generated by a merger. We extend the pricing pressure approach of recent work to allow for non-Bertrand conduct, adjusting the diversion ratio and incorporating the change in anticipated accommodation. To convert pricing pressures into quantitative estimates of price changes, we multiply them by the merger pass-through matrix, which is close under conditions we specify to the pre-merger rate at which cost increases are passed through to prices. Weighting the price changes by quantities gives the change in consumer surplus. How should we predict the unilateral impact of a merger on prices and welfare? The United States and United Kingdom horizontal merger guidelines released last year incorporate an approach based on the work of Werden (1996), Farrell and Shapiro (2010a) and others that uses information local to pre-merger prices to indicate the directional impacts of the mergers. This "first-order" approach to merger analysis (FOAM) is admirable for adopting both the simplicity and transparency of approaches based on market definition and the firm grounding in formal economics of market simulations. This paper takes this strategy a step further, attempting to incorporate the remaining strengths of alternative approaches: the quantitative precision of merger simulation and the agnosticism about market conduct and cost structures embodied in market definition. We show that FOAM, thus modified, provides * We could not have written this paper without the encouragement and guidance of Joe Farrell and Carl Shapiro. We are also grateful to