Potential Competition in Preemption Games

We consider a preemption game with two potential competitors who come into play at some random secret times. The presence of a competitor is revealed to a player only when the former moves, which terminates the game. We show that all perfect Bayesian equilibria give rise to the same distribution of players' moving times. Moreover, there exists a unique perfect Bayesian equilibrium in which each player's behavior from any time on is independent of the date at which she came into play. We find that competitive pressure is nonmonotonic over time, and that private information tends to alleviate rent dissipation. Our results have a natural interpretation in terms of eroding reputations.

Potential Competition in Preemption Games

We consider a preemption game with two potential competitors who come into play at some random secret times. The presence of a competitor is revealed to a player only when the former moves, which terminates the game. We show that all perfect Bayesian equilibria give rise to the same distribution of players' moving times. Moreover, there exists a unique perfect Bayesian equilibrium in which each player's behavior from any time on is independent of the date at which she came into play. We find that competitive pressure is nonmonotonic over time, and that private information tends to alleviate rent dissipation. Our results have a natural interpretation in terms of eroding reputations

Potential Competition in Preemption Games

We consider a preemption game with two potential competitors who come into play at some random secret times. The presence of a competitor is revealed to a player only when the former moves, which terminates the game. We show that all perfect Bayesian equilibria give rise to the same distribution of players' moving times. Moreover, there exists a unique perfect Bayesian equilibrium in which each player's behavior from any time on is independent of the date at which she came into play. We find that competitive pressure is nonmonotonic over time, and that private information tends to alleviate rent dissipation. Our results have a natural interpretation in terms of eroding reputations

A Dynamic Duopoly Investment Game under Uncertain Market Growth

We model investments in capacity in a homogeneous product duopoly facing uncertain demand growth. Capacity building is achieved through adding production units that are durable and lumpy and whose cost is irreversible. There is no exogenous order of moves, no first-mover or second-mover advantage, no commitment, and no finite horizon; while building their capacity over time, firms compete `a la Cournot in the product market. We investigate Markov Perfect Equilibrium (MPE) paths of the investment game, which may include preemption episodes and tacit collusion episodes. However, when firms have not yet invested in capacity, the sole pattern that is MPEcompatible is a preemption episode with firms investing at different times, but both have equal value. The first such investment may occur earlier, and therefore be riskier, than socially optimal. When both firms hold capacity, tacit collusion episodes may be MPE-compatible with firms investing simultaneously at a postponed time (generating an investment wave in the industry). We show that the emergence of such episodes is favored by higher demand volatility, faster market growth, and lower discount rate (cost of capital).

Live Sports Virtual Reality Broadcasts: Copyright and Other Protections

As virtual reality rapidly progresses, broadcasts are able to increasingly mimic the experience of actually attending a game. As the technology advances and the viewer can freely move about the game and virtual reality can simulate the in-stadium attendance, the virtual reality broadcast nears the point where the broadcast is indistinguishable from the underlying game. Thus, novel copyright protection issues arise regarding the ability to protect the experience through copyright. Although normal broadcasts may be copyrighted, virtual reality broadcasts of live sports could lack protection under the Copyright Act because the elements of originality, authorship, and fixation are harder to satisfy for this type of work. If the elements that formerly protected broadcasts through copyright no longer apply, the virtual reality broadcast of the game will lose copyright protection. The virtual reality broadcaster can receive protection for the work in several ways, such as (1) by broadcaster-made modifications to the transmitted broadcast, (2) through misappropriation claims, or (3) by inserting contract terms. These additional steps maintain the ability of virtual reality broadcasters to disseminate works without fear the work will not be protectable by the law

Better Late Than Early: Vertical Differentiation in the Adoption of a New Technology

After the initial breakthrough in the research phase of R&D a new product undergoes a process of change, improvement and adaptation to market conditions. We model the strategic behavior of firms in this development phase of R&D. We emphasize that a key dimension to this competition is the innovations that lead to product differentiation and quality improvement. In a duopoly model with a single adoption choice, we derive endogeneously the level and diversity of product innovations. We demonstrate the existence of equilibria in which one firm enters early with a low quality product while the other continues to develop the technology and eventually markets a high quality good. In such an equilibrium, no monopoly rent is dissipated and the later innovator makes more profits. Incumbent firms may well be the early innovators, contrary to the predictions of the hypothesis.

Dynamic Spatial Competition Between Multi-Store Firms

We propose a dynamic model of an oligopoly industry characterized by spatial competition between multi-store firms. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations, and on location-specific private-information shocks. We provide an algorithm to compute Markov Perfect Equilibria (MPE) in our model. We conduct several numerical experiments to study how the propensity of multi-store retailers to spatial preemptive behavior depends on the magnitude of entry costs, exit value and transportation costs.Spatial competition; Market dynamics; Sunk costs; Spatial preemptive behavior.

Online Fantasy Sports Litigation and the Need for a Federal Right of Publicity Statute

The right of publicity is currently a jumble of state common law and state statutes, but the online fantasy sports industry crosses state lines with ease. Having witnessed the great revenue potential of online fantasy sports, professional sports leagues are trying to strong-arm independent fantasy sports providers out of the business by using the right of publicity to assert property interests in the statistics generated by professional players, and used by fantasy sports providers to run their online games. The first such attempt--by Major League Baseball--failed. However, the state law nature of the right of publicity prevents any single court opinion from binding the industry or other jurisdictions. The National Football League is attempting to achieve a more favorable result in a different jurisdiction. If successful, other professional sports leagues will be encouraged to litigate the issue, and Major League Baseball might even attempt to re-litigate its position in other states. This free-for-all could result in different rules for different sports in different states, which would not only be untenable for the online fantasy sports providers, but a violation of the Constitution as well. A cohesive federal right of publicity statute would (1) bring uniformity to the doctrine, (2) give federal courts (where these actions are being brought) a federal law to apply instead of allowing them to continue muddying the application of state laws, (3) directly address First Amendment concerns, and (4) solve the dormant commerce clause violation alluded to above

The Dynamics of Industry Investments

We study the development of a duopoly in a continuous-time model of capacity investment under no commitment by firms regarding future actions. While capacity units are costly, indivisible, durable, and large relative to market size, early entry cannot secure a first-mover advantage and both firms are active beyond some level of market development. We evaluate the investment real options in that context. In the early industry development phase, the sole Markov Perfect Equilibrium (MPE) is a preemption equilibrium with the first industry investment occurring earlier (hence being riskier) than socially optimal. Once both firms hold capacity, tacit collusion, taking the form of postponed capacity investment, may occur as a MPE. Volatility and the expected speed of market development play a crucial role in competitive behavior: we show that the emergence of tacit collusion equilibria is favored by higher demand volatility, faster market growth, as well as by lower discount rate. Nous étudions le développement d'un duopole dans un modèle en temps continu d'investissement en capacité sans engagement des firmes quant à leurs actions futures. Bien que les unités de capacité soient coûteuses, indivisibles, durables et de taille non négligeable par rapport au marché, l'entrée hâtive ne peut conférer d'avantage durable et à partir d'un certain niveau de développement du marché, les deux firmes sont en activité. Nous évaluons les options réelles d'investissement dans ce contexte. Initialement, le seul équilibre Markovien parfait (ÉMP) est un équilibre de préemption dans lequel le premier investissement en capacité se produit plus tôt et comporte un risque plus élevé que socialement désirable. Une collusion tacite pour retarder les augmentations de capacité subséquentes peut devenir possible en ÉMP. La volatilité du marché et sa vitesse de croissance jouent un rôle crucial : l'émergence d'équilibres de collusion tacite est favorisée par une volatilité plus grande, une croissance plus rapide et un taux d'intérêt ou d'actualisation plus faible.real options, duopoly, preemption, collusion, lumpy investment, options réelles, duopole, préemption, collusion, investissement en bloc