169 research outputs found
Does the absence of competition in the market foster competition for the market? A dynamic approach to aftermarkets
In this paper, we investigate dynamic price competition when firms strategically interact in two distinct but interrelated markets: a primary market and an aftermarket, where indirect network effects arise. We set up a differential game of two-dimensional price competition and we conclude that the absence of price competition in the aftermarket (competition in the market) fosters dynamic price competition in the primary market (competition for the market). We also investigate the impact of network sizes on firms' prices in the primary market concluding that, in equilibrium, larger firms have incentives to compete more fiercely for new "uncolonized" consumers.dynamic competition, differential games, Linear Markov Perfect Equilibrium, aftermarkets, network effects.
The Sources of Protectionist Drift in Representative Democracies
We analyze a two country-two good model of international trade in which citizens in each country differ by their specific factor endowments. The trade policy in each country is set by the politician who has been elected by the citizens in a previous stage. Due to a delegation effect citizens generally favor candidates who are more protectionist than they are. The (multiple) one candidate per country-equilibria exhibit a âprotectionist driftâ owing to this delegation effect. In addition, we find an additional source of âprotectionist driftâ which we call the abstention effect. Not only do candidates wish to delegate to more protectionist colleagues, but these more protectionist colleagues who can win election, prefer still more protectionist candidates than themselves. Therefore, they have an incentive to abstain, that is, not run for election. We show that because of this âabstention effectâ there exists a range of electable citizens all of whom are more protectionist than the median voterâs most preferred candidate.Tariffs, Political Economy, Commercial Policy
Does the absence of competition in the market foster competition for the market ? A dynamic approach to aftermarkets
In this paper, we investigate dynamic price competition when firms strategically interact in two distinct but interrelated markets : a primary market and an aftermarket, where indirect network effects arise. We set up a differential game of two-dimensional price competition and we conclude that the absence of price competition in the aftermarket (competition in the market) fosters dynamic price competition in the primary market (competition for the market). We also investigate the impact of network sizes on firmsâ prices in the primary market concluding that, in equilibrium, larger firms have incentives to compete more fiercely for new âuncolonizedâ consumers.dynamic competition; differential games; Linear Markov Perfect equilibrium
The Sources of Protectionist Drift in Representative Democracies
We analyze a two country-two goods model of international trade in which citizens in each country differ by their specific factor endowments. The trade policy in each country is set by the politician who has been elected by the citizens in a previous stage. Due to a delegation effect citizens generally favor candidates who are more protectionist than they are. The (multiple) one candidate per country-equilibria exhibit a ''protectionist drift'' owing to this delegation effect and an abstention effect.
Fixed Transport Costs and International Trade
We develop a simple two country model of international trade that assumes that there is a fixed cost of doing international trade. We show that this leads to multiple equilibria that can be Pareto-ranked. We examine the stability properties of these equilibria.
To acquire, or to compete? An entry dilemna
In this paper we address the following question: is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete? We illustrate the answer by considering competition in the banking sector.Vertical differentiation, entry, banking competition
Advertising and the rise of the free daily newspapers
We analyze the competition between two newspapers in a vertical differentiation model where the qualities of the journals are determined endogenously in the first stage of the game. We show that when the advertising revenues per reader increase there is a critical value above which the quality of the low quality newspaper discontinuously falls while it become similtaneously a free newspaper. This is beneficial to the high quality journal and detrimental to the readers.Advertising, Newspaper quality
To acquire or to compete ? An entry dilemna
In this paper we address the following question : is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete ? We illustrate the answer by considering competition in the banking sectorvertical differentiation; entry; banking competition
The TV news scheduling game when the newscasterâs face matters
The present note first provides an alternative formulation of the Cancian, Bills and Bergström (1995) - problem which discards the non-existence difficulty and consequently allows to consider some extensions of the TV-newscast scheduling game. The extension we consider consists in assuming that viewersâ preferences between the competing channels do not depend only on the timing of their broadcast, but also on some other characteristics, like the content of the show or the identity of the newscaster. Then we identify a sufficient condition on the dispersion of these preferences over the viewersâ population guaranteeing the existence of a unique Nash equilibrium. It turns out that, at this equilibrium, both networks broadcast their news at the same instant.advertising; newspaper quality
Foreign languagesâ acquisition: self learning and linguistic schools
We examine patterns of acquiring non-native languages in a model with two linguistic communities with heterogeneous learning skills, where every individual faces the choice of self-learning the foreign language or acquiring it at a profit-maximizing linguistic school. We consider a one-school model with divisions in both communities and various two-school settings with a school in each community. We compare the number of learners and welfare implications under self- learning with those obtained under various schooling contexts. In particular, we show that for communities with similar size, introducing language schools always increases the number of learners with respect to the exclusive self-learning option.communicative benefits, linguistic equilibrium, learning costs
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