Banks’ Internationalization Strategies: The Role of Bank Capital Regulation

This paper studies how capital requirements influence a bank’s mode of entry into foreign financial markets. We develop a model of an internationally operating bank that creates and allocates liquidity across countries and argue that the advantage of multinational banking over offering cross-border financial services depends on the benefit and the cost of intimacy with local markets. The benefit is that it allows to create more liquidity. The cost is that it causes inefficiencies in internal capital markets, on which a multinational bank relies to allocate liquidity across countries. Capital requirements affect this trade-off by influencing the degree of inefficiency in internal capital markets.incomplete financial contracting, cross-border financial services, multinational banking, liquidity allocation, capital regulation

On Factors Affecting the Usage and Adoption of a Nation-wide TV Streaming Service

Using nine months of access logs comprising 1.9 Billion sessions to BBC iPlayer, we survey the UK ISP ecosystem to understand the factors affecting adoption and usage of a high bandwidth TV streaming application across different providers. We find evidence that connection speeds are important and that external events can have a huge impact for live TV usage. Then, through a temporal analysis of the access logs, we demonstrate that data usage caps imposed by mobile ISPs significantly affect usage patterns, and look for solutions. We show that product bundle discounts with a related fixed-line ISP, a strategy already employed by some mobile providers, can better support user needs and capture a bigger share of accesses. We observe that users regularly split their sessions between mobile and fixed-line connections, suggesting a straightforward strategy for offloading by speculatively pre-fetching content from a fixed-line ISP before access on mobile devices.Comment: In Proceedings of IEEE INFOCOM 201

The role of information in repeated games with frequent actions

We show that the ways incentives can be provided during dynamic interaction depend very crucially on the manner in which players learn information. This conclusion is established in a general stationary environment with noisy public monitoring and frequent actions. The monitoring process can be represented by a sum of a multi-dimensional Brownian component and a jump process. We show that jumps can be used to provide incentives both with transfers and value burning while continuous information can be used to provide incentives only with transfers. Also, it is asymptotically optimal to use the cumulative realization of the Brownian component linearly. Additionally, we approximate the equilibrium payoff set for fixed small discount rates as the periods become short by a series of linear programming problems. These problems highlight how the two types of information can be used to provide incentives.repeated games, dynamic incentives, frequent moves

On the Disclosure of Promotion Value in Platforms with Learning Sellers

We consider a platform facilitating trade between sellers and buyers with the objective of maximizing consumer surplus. Even though in many such marketplaces prices are set by revenue-maximizing sellers, platforms can influence prices through (i) price-dependent promotion policies that can increase demand for a product by featuring it in a prominent position on the webpage and (ii) the information revealed to sellers about the value of being promoted. Identifying effective joint information design and promotion policies is a challenging dynamic problem as sellers can sequentially learn the promotion value from sales observations and update prices accordingly. We introduce the notion of confounding promotion policies, which are designed to prevent a Bayesian seller from learning the promotion value (at the expense of the short-run loss of diverting consumers from the best product offering). Leveraging these policies, we characterize the maximum long-run average consumer surplus that is achievable through joint information design and promotion policies when the seller sets prices myopically. We then establish a Bayesian Nash equilibrium by showing that the seller's best response to the platform's optimal policy is to price myopically at every history. Moreover, the equilibrium we identify is platform-optimal within the class of horizon-maximin equilibria, in which strategies are not predicated on precise knowledge of the horizon length, and are designed to maximize payoff over the worst-case horizon. Our analysis allows one to identify practical long-run average optimal platform policies in a broad range of demand models

Sequential Selection of Correlated Ads by POMDPs

Online advertising has become a key source of revenue for both web search engines and online publishers. For them, the ability of allocating right ads to right webpages is critical because any mismatched ads would not only harm web users' satisfactions but also lower the ad income. In this paper, we study how online publishers could optimally select ads to maximize their ad incomes over time. The conventional offline, content-based matching between webpages and ads is a fine start but cannot solve the problem completely because good matching does not necessarily lead to good payoff. Moreover, with the limited display impressions, we need to balance the need of selecting ads to learn true ad payoffs (exploration) with that of allocating ads to generate high immediate payoffs based on the current belief (exploitation). In this paper, we address the problem by employing Partially observable Markov decision processes (POMDPs) and discuss how to utilize the correlation of ads to improve the efficiency of the exploration and increase ad incomes in a long run. Our mathematical derivation shows that the belief states of correlated ads can be naturally updated using a formula similar to collaborative filtering. To test our model, a real world ad dataset from a major search engine is collected and categorized. Experimenting over the data, we provide an analyse of the effect of the underlying parameters, and demonstrate that our algorithms significantly outperform other strong baselines

The Pharmacia Story of Entrepreneurship and as a Creative Technical University - An Experiment in Innovation, Organizational Break Up and Industrial Renaissance

While innovative technology supply has been the focus of much neo Schumpeterian modeling, few have addressed the critical and more resource demanding commercializing of the same technologies. The result may have been a growth policy focused on the wrong problem. Using competence bloc theory and a firm based macro to macro approach we abandon the assumed linear relation between technology change and economic growth of such models, and demonstrate that lack of local commercialization competences is likely to block growth even though innovative technology supplies are abundant. The break up, reorganization and part withdrawal of Pharmacia from the local Uppsala (in Sweden) economy after a series of international mergers illustrate. Pharmacia has “released” a wealth of technologies in local markets. Local commercialization competence, notably industrially competent financing has, however, not been sufficient to fill in through indigenous entrepreneurship the vacuum left by Pharmacia. Only thanks to foreign investors, attracted by Pharmacia technologies, that have opted to stay for the long term the local Uppsala economy seems to be heading for a successful future. The Pharmacia case also demonstrates the role of advanced firms as “technical universities” and the nature of an experimentally organized economy (EOE) in which business mistakes are a natural learning cost for economic development.Competence Bloc Theory; Commercialization of Innovations; Experimentally Organized Economy; Innovation and Entrepreneurship; Pharmaceutical industry

Essays on competition, cooperation, and market structures

textMy dissertation examines competition, cooperation, and efficiency in three market settings in which a population of economic agents interact, either directly with each other in pairwise matches, directly with firms, or with firms via a platform. In one chapter I consider a population of customers who have different valuations for a good sold by competing merchants, as well as varying preferences over the merchant from which to purchase the good and the payment form with which to make the purchase, and examine what the effects might be if a merchant placed an additional surcharge on transactions completed with a payment form that is more costly for the merchant. The cost for the merchant can vary dramatically depending on the payment form used. For example, a credit card transaction is generally more expensive for the merchant than a debit card transaction, even if the transaction is completed using the same technology and is processed over the same network (e.g., a MasterCard signature debit transaction and a MasterCard credit card transaction). Historically, with limited exceptions, merchants have been prohibited, both by law and by the contract permitting the acceptance of that network's cards, from charging customers different prices for transactions completed using different payment cards, despite the different costs these transactions impose on them. Recent concessions made by several major payment networks in response to legal challenges raises the possibility that this paradigm might change in the future. This chapter examines what the effects might be if merchants were permitted to charge customers different prices based on the payment form and whether these effects depend on differences between the merchants, such as differences in the marginal cost of providing the good. In another chapter, I consider a population of individuals made up of more-patient and less-patient types who interact directly with each other in a repeated prisoner's dilemma embedded in a search model. A player is matched anonymously with another player to play a prisoner's dilemma game repeatedly until the match is ended, either exogenously or endogenously by one of the players, at which point each player may receive another random match. I first determine when it is feasible to achieve the best outcome in which all players cooperate. When it is not possible to achieve full cooperation, I examine how welfare can be improved over the outcome in which no players cooperate. When conditions are such that less-patient players choose not to cooperate, I first examine how separation by action within a single market can increase welfare for all players over the uncooperative equilibrium, with more-patient players choosing to cooperate in hopes of forming a cooperative relationship, despite the risk of being matched with a less-patient player who chooses not to cooperate. I then examine how full separation of the more- and less-patient players, made possible by introduction of a second market, can increase the welfare of the more-patient players without harming the less-patient players. In a third chapter, customers choose to purchase a good from one of several competing firms in a setting in which network congestion and firms' investment in capacity plays an important role in firm costs and product quality, e.g., the wireless industry. Wireless carriers (e.g., Verizon) compete not only on the price of their service but also on its quality. The quality of a carrier's service is determined in part by the quantity of customers it serves and by investment in capacity with which to serve them. While the primary effect of a carrier increasing its capacity is an increase in that carrier's service quality, there are also externality effects on other wireless carriers. For example, if carrier A increases its capacity, thereby increasing its service quality, and causes some customers to leave a competing carrier B, the service quality experienced by customers who remain with carrier B will increase as a result of the decreased congestion in carrier B's network. This chapter examines the interplay between these effects alongside traditional price competition in this oligopoly setting.Economic

Packet Skipping and Network Coding for Delay-Sensitive Network Communication

We provide an analytical study of the impact of packet skipping and opportunistic network coding on the timely communication of messages through a single network element. In a first step, we consider a single-server queueing system with Poisson arrivals, exponential service times, and a single buffer position. Packets arriving at a network node have a fixed deadline before which they should reach the destination. To preserve server capacity, we introduce a thresholding policy, based on remaining time until deadline expiration, to decide whether to serve a packet or skip its service. The obtained goodput improvement of the system is derived, as well as the operating conditions under which thresholding can enhance performance. Subsequently, we focus our analysis on a system that supports network coding instead of thresholding. We characterize the impact of network coding at a router node on the delivery of packets associated with deadlines. We model the router node as a queueing system where packets arrive from two independent Poisson flows and undergo opportunistic coding operations. We obtain an exact expression for the goodput of the system and study the achievable gain. Finally, we provide an analytical model that considers both network coding and packet skipping, capturing their joint performance. A comparative analysis between the aforementioned approaches is provided