Robust Quantitative Comparative Statics for a Multimarket Paradox

We introduce a quantitative approach to comparative statics that allows to bound the maximum effect of an exogenous parameter change on a system's equilibrium. The motivation for this approach is a well known paradox in multimarket Cournot competition, where a positive price shock on a monopoly market may actually reduce the monopolist's profit. We use our approach to quantify for the first time the worst case profit reduction for multimarket oligopolies exposed to arbitrary positive price shocks. For markets with affine price functions and firms with convex cost technologies, we show that the relative profit loss of any firm is at most 25% no matter how many firms compete in the oligopoly. We further investigate the impact of positive price shocks on total profit of all firms as well as on social welfare. We find tight bounds also for these measures showing that total profit and social welfare decreases by at most 25% and 16.6%, respectively. Finally, we show that in our model, mixed, correlated and coarse correlated equilibria are essentially unique, thus, all our bounds apply to these game solutions as well.Comment: 23 pages, 1 figur

Essays in Environmental and Political Economics

This thesis explores questions in environmental and political economics over four chapters. In the first chapter, I investigate theoretically how and why some polluting firms may politically support environmental taxes. In chapter two I present a new theoretical framework for quantifying the impact of environmental taxes on firm profits, and then estimate profit impacts for US airlines. Chapter three is an empirical analysis of the role of the urban environment in Victorian Britain. Chapter four presents an empirical analysis of the political economy of rebellions by legislators against their governing parties, using novel data from the UK parliament in 2019

Generalized linear competition: From pass-through to policy

Economic policy and shifts in input market prices often have significant effects on the marginal costs of firms and can prompt strategic responses that make their impact hard to predict. We introduce “generalized linear competition” (GLC), a new model th

Economics of Conflict and Terrorism

This book contributes to the literature on conflict and terrorism through a selection of articles that deal with theoretical, methodological and empirical issues related to the topic. The papers study important problems, are original in their approach and innovative in the techniques used. This will be useful for researchers in the fields of game theory, economics and political sciences

On the Optimal Design of Leniency Programmes

Abstract This thesis comprises of a collection of essays that aim at enhancing our under- standing of the underlying mechanics of leniency policies in antitrust. In Chapter 1, we provide a systematic overview of the most in�uential contribu- tions to the literature on collusion and leniency policies, with a focus on antitrust law. The survey elucidates the e¤ects of leniency programmes on cartel formation and cartel implementation. In Chapter 2, we provide a model to investigate the impact of a leniency pro- gramme on collusive �rms�incentives to keep or destroy hard incriminating evi- dence. We show that �rms may willfully keep the hard evidence to facilitate the implementation of the cartel. Firms are more inclined to keep the hard evidence when a leniency programme is available. Finally, �rms are more likely to destroy the hard evidence when the collusive pro�ts-�ne ratio increases. In Chapter 3, we study the strategic interaction between a cartel and an an- titrust authority whose evidence against the cartel is private information. Within the framework of a signalling game, we explore the antitrust authority�s incentives to reveal the strength of its evidence, before committing to its prosecutorial e¤ort. We show that, despite its potentially feeble evidence, the antitrust authority can exploit its informational lead and induce the cartel to self-report at an earlier stage of the prosecutorial process. The more generous the leniency programme, the easier it is to induce self-reporting by the cartel. In Chapter 4, we provide a model to characterize the optimal leniency pro- gramme when colluding �rms can invest resources to avoid detection. We show that the optimal �ne discount rate depends positively on the severity of the �ne and negatively on the probability of investigation and the cost of avoidance ac- tivities. A leniency programme that ignores �rms�e¤orts to avoid detection may result in under-deterrence