Spatial competition and price formation

We look at price formation in a retail setting, that is, companies set prices, and consumers either accept prices or go someplace else. In contrast to most other models in this context, we use a two-dimensional spatial structure for information transmission, that is, consumers can only learn from nearest neighbors. Many aspects of this can be understood in terms of generalized evolutionary dynamics. In consequence, we first look at spatial competition and cluster formation without price. This leads to establishement size distributions, which we compare to reality. After some theoretical considerations, which at least heuristically explain our simulation results, we finally return to price formation, where we demonstrate that our simple model with nearly no organized planning or rationality on the part of any of the agents indeed leads to an economically plausible price.Comment: Minor change

Continuous-Variable Quantum Games

We investigate the quantization of games in which the players can access to a continuous set of classical strategies, making use of continuous-variable quantum systems. For the particular case of the Cournot's Duopoly, we find that, even though the two players both act as "selfishly" in the quantum game as they do in the classical game, they are found to virtually cooperate due to the quantum entanglement between them. We also find that the original Einstein-Podolksy-Rosen state contributes to the best profits that the two firms could ever attain. Moreover, we propose a practical experimental setup for the implementation of such quantum games.Comment: 3 figure

Complementary Patents and Market Structure

Many high technology goods are based on standards that require several essential patents owned by different IP holders. This gives rise to a complements and a double mark-up problem. We compare the welfare effects of two different business strategies dealing with these problems. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always benefits from entry and innovatio

Double Exponential Instability of Triangular Arbitrage Systems

If financial markets displayed the informational efficiency postulated in the efficient markets hypothesis (EMH), arbitrage operations would be self-extinguishing. The present paper considers arbitrage sequences in foreign exchange (FX) markets, in which trading platforms and information are fragmented. In Kozyakin et al. (2010) and Cross et al. (2012) it was shown that sequences of triangular arbitrage operations in FX markets containing 4 currencies and trader-arbitrageurs tend to display periodicity or grow exponentially rather than being self-extinguishing. This paper extends the analysis to 5 or higher-order currency worlds. The key findings are that in a 5-currency world arbitrage sequences may also follow an exponential law as well as display periodicity, but that in higher-order currency worlds a double exponential law may additionally apply. There is an "inheritance of instability" in the higher-order currency worlds. Profitable arbitrage operations are thus endemic rather that displaying the self-extinguishing properties implied by the EMH.Comment: 22 pages, 22 bibliography references, expanded Introduction and Conclusion, added bibliohraphy reference

Bailouts in a common market: a strategic approach

Governments in the EU grant Rescue and Restructure Subsidies to bail out ailing firms. In an international asymmetric Cournot duopoly we study effects of such subsidies on market structure and welfare. We adopt a common market setting, where consumers from the two countries form one market. We show that the subsidy is positive also when it fails to prevent the exit. The reason is a strategic effect, which forces the more efficient firm to make additional cost-reducing effort. When the exit is prevented, allocative and productive efficiencies are lower and the only gaining player is the rescued firm

Uniqueness of Nash equilibria in quantum Cournot duopoly game

A quantum Cournot game of which classical form game has multiple Nash equilibria is examined. Although the classical equilibria fail to be Pareto optimal, the quantum equilibrium exhibits the following two properties, (i) if the measurement of entanglement between strategic variables chosen by the competing firms is sufficiently large, the multiplicity of equilibria vanishes, and, (ii) the more strongly the strategic variables are entangled, the more closely the unique equilibrium approaches to the optimal one.Comment: 7 pages, 2 figure

The Application of Asymmetric Entangled States in Quantum Game

In the present letter, we propose a more general entangling operator to the quantization of Cournot economic model, in which players can access to a continuous set of strategies. By analyzing the relation between the von Neumann entropy of the entangled state and the total profit of two players precisely, we find that the total profit at the Nash equilibrium always achieves its maximal value as long as the entropy tends to infinity. Moreover, since the asymmetry is introduced in the entangled state, the quantum model shows some kind of "encouraging" and "suppressing" effect in profit functions of different players.Comment: 6 pages, 5 figure

Collective states in social systems with interacting learning agents

We consider a social system of interacting heterogeneous agents with learning abilities, a model close to Random Field Ising Models, where the random field corresponds to the idiosyncratic willingness to pay. Given a fixed price, agents decide repeatedly whether to buy or not a unit of a good, so as to maximize their expected utilities. We show that the equilibrium reached by the system depends on the nature of the information agents use to estimate their expected utilities.Comment: 18 pages, 26 figure

Dynamics & Predictions in the Co-Event Interpretation

Sorkin has introduced a new, observer independent, interpretation of quantum mechanics that can give a successful realist account of the 'quantum microworld' as well as explaining how classicality emerges at the level of observable events for a range of systems including single time 'Copenhagen measurements'. This 'co-event interpretation' presents us with a new ontology, in which a single 'co-event' is real. A new ontology necessitates a review of the dynamical & predictive mechanism of a theory, and in this paper we begin the process by exploring means of expressing the dynamical and predictive content of histories theories in terms of co-events.Comment: 35 pages. Revised after refereein