1,355 research outputs found
Uncertain Price Competition in a Duopoly with Heterogeneous Availability
We study the price competition in a duopoly with an arbitrary number of
buyers. Each seller can offer multiple units of a commodity depending on the
availability of the commodity which is random and may be different for
different sellers. Sellers seek to select a price that will be attractive to
the buyers and also fetch adequate profits. The selection will in general
depend on the number of units available with the seller and also that of its
competitor - the seller may only know the statistics of the latter. The setting
captures a secondary spectrum access network, a non-neutral Internet, or a
microgrid network in which unused spectrum bands, resources of ISPs, and excess
power units constitute the respective commodities of sale. We analyze this
price competition as a game, and identify a set of necessary and sufficient
properties for the Nash Equilibrium (NE). The properties reveal that sellers
randomize their price using probability distributions whose support sets are
mutually disjoint and in decreasing order of the number of availability. We
prove the uniqueness of a symmetric NE in a symmetric market, and explicitly
compute the price distribution in the symmetric NE.Comment: 45 pages, Accepted for publication in IEEE Transaction on Automatic
Contro
Digital piracy : theory
This article reviews recent theoretical contributions on digital piracy. It starts by elaborating on the reasons for intellectual property protection, by reporting a few facts about copyright protection, and by examining reasons to become a digital pirate. Next, it provides an exploration of the consequences of digital piracy, using a base model and several extensions (with consumer sampling, network effects, and indirect appropriation). A closer look at market-structure implications of end-user piracy is then taken. After a brief review of commercial piracy, additional legal and private responses to end-user piracy are considered. Finally, a quick look at emerging new business models is taken.information good, piracy, copyright, IP protection, internet, peer-to-peer, software, music
Regional asymmetries in farm size
This paper explores how the initial farm size structure affects the exit decision of farms inducing free land capacities, and the allocation of the newly available land resources to the remaining farms in a particular region. We model an agricultural market where large and small firms first decide whether to leave the market or not; in case of continuing in production the farms compete for getting access to additional land resources in a Vickrey auction. We find that larger farms allocate more additional quantity than small farms; the latter are more likely to leave the market. An empirical illustration gives further support and reveals the relation between farm size structure, farm exits and growth of the large.asymmetries, land market, capacity allocation, Vickrey auction, Agricultural and Food Policy, Farm Management, Land Economics/Use, L11, L12, Q12,
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Product selling vs. pay-per-use service: a strategic analysis of competing business models
We present a model that suggests possible explanations for the observed proliferation of “pay-per-use" (PPU) business models over the last two decades. Delivering “fractions" of a product as a service offers a cost advantage to customers with lower usage but requires extra delivery costs. Previous research focused on information goods (with negligible production costs) and predicted that PPU, when arising as a differentiation to selling in equilibrium, fundamentally achieves lower profits than selling. We extend the theory by covering goods with any production cost, in duopolistic competition. We show that PPU business models can be more profitable than selling (especially at mid-range production costs), as long as their delivery costs are not too high, a requirement that is more easily fulfilled as new technologies reduce these costs. Moreover, if firms are imperfectly informed about their customers' usage profiles, PPU's effective pricing of customers' varying usage offers an additional advantage over selling. This requires companies to employ accounting methods that do not inappropriately allocate production costs over stochastic usage levels. If PPU service provision suffers from queueing inefficiencies, this does not fundamentally change the relative profitability of the PPU and selling models, provided that PPU providers can attract sufficiently high demand to benefit from pooling economies
Platform Competition with Endogenous Multihoming
A model of two-sided market (for credit cards) is introduced and discussed. In this model, agents can join none, one, or more than one platform (multihoming), depending on access prices and the choices made by agents on the opposite market side. Although emerging multihoming patterns are, clearly, one aspect of equilibrium in a two-sided market, this issue has not yet been thoroughly addressed in the literature. This paper provides a general theoretical framework, in which homing partitions are conceived as one aspect of market equilibrium, rather than being set ex-ante, through ad-hoc assumptions. The emergence of a specific equilibrium partition is a consequence of: (1) the structure of costs and benefits, (2) the degree and type of heterogeneity among agents, (3) the intensity of platform competition.Two-sided markets, Network externalities, Standards, Platforms, Multihoming
The Impact of Entry and Competition by Open Source Software on Innovation Activity
This paper presents the stylized facts of open source software innovation and provides empirical evidence on the impact of increased competition by OSS on the innovative activity in the software industry. Furthermore, we introduce a simple formal model that captures the innovation impact of OSS entry by examining a change in market structure from monopoly to duopoly under the assumption that software producers compete in technology rather than price or quantities. The paper identifies a pro-innovative effect of OSS competition.open source software, innovation, strategic interaction
The Impact of Entry and Competition by Open Source Software on Innovation
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Game Theory and Economic Behavior
Until the beginning of 1950s, the economic theory in general, and the microeconomic theory in particular, relied totally on the deterministic character of economic phenomena. Nowadays microeconomic models are built on uncertain elements in a competitive environment that is affected by risk and uncertainty. Two centuries later, traditional microeconomics, also known as derived microeconomics, continues to be based on Adam Smith’s theory. As individuals are interested in participating in commercial transactions, but for these to take place effectively, two essential principles should be observed: the principle of rationality and the principle of pure and perfect competition. The link between Brower’ fixed point theorems on the one hand and John von Neumann’s minimax theorem on the other hand enabled other authors such as McKenzie Arrow and Debreu Uzawa to state and demonstrate simpler but more general theorems than that of Abraham Wald. It was thus supposed that consumer preferences in a pool of possible consumptions are reflexive, transitive and all are comparable. Using game theory as a reference framework to represent the behavior of economic agents, microeconomics strongly renews its scope of investigation. The problem that arises is no longer linked to the study of perfectly competitive markets, but mostly to how agents coordinate their decisions in different strategic configuration circumstances. The use of such concepts as risk, antiselection or coordination limits has opened new scopes to economy in general and to microeconomics in particular.Game Theory, behavior of economic, traditional microeconomics, new microeconomics
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