Pacman Refutes the Coase Conjecture: Durable-Goods Monopoly with Discrete Demand

We analyze a dynamic game between consumers with unit demands and the sole seller of a durable good. Unlike previous analyses, we assume there exists a finite collection of buyers rather than a continuum. We show that none of the main conclusions of the durable-goods literature survives this change in assumption. In particular, for any demand curve there exists a subgame-perfect equilibrium such that for discount factors near one the monopolist's profit approaches the profit attainable under perfect price discrimination. This contradicts Coase's conjecture (1972)--proved formally for the continuum case by Gul, Sonnenschein, and Wilson (1986)--that the monopolist's profit must always converge to zero. It also implies that renting or precommitting to a path of prices-which Bulow (1982) and Stokey (1979) have shown, respectively, must always increase profit with a continuum of buyers--may strictly reduce profits when the collection of buyers is finite. Hence, while in other contexts the assumption of a continuum of consumers has proved an innocuous and useful simplification, in the context of durable-goods monopoly it has proved misleading.Center for Research on Economic and Social Theory, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/100809/1/ECON026.pd

Price Discrimination and Intertemporal Self-Selection

We consider a monopolist selling durable goods to consumers with unit demands but different preferences for quality. The seller can offer items of different quality at the same time to induce buyers to self-select, as in Mussa-Rosen (1978), but is not artifically constrained to offer only one such menu. Instead the seller can offer a sequence of menus over time. In the two-buyer case, the seller finds it optimal to abandon multi-item menus with their quality distortions and instead induces self-selection intertemporally. In the unique subgame-perfect equilibrium of the finite-horizon game and the particular equilibrium that we consider in the infinite-horizon game, the monopolist offers in succession single items of efficient quality. In the continuous-time limit of the infinite-horizon game (under both complete and incomplete information), the monopolist approximates the present value of perfect price discrimination. All of our qualitative results for the two-buyer case continue to hold with an arbitrary, finite number of buyers of different types in some equilibria of the complete-information, infinite-horizon game.Center for Research on Economic and Social Theory, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/100820/1/ECON027.pd

Intertemporal Self-Selection with Multiple Buyers Under Complete and Incomplete Information

We consider a monopolist selling durable goods to consumers with unit demands but different preferences for quality. The seller can offer items of different quality at the same time to induce buyers to self-select, as in Mussa-Rosen (1978), but is not artifically constrained to offer only one such menu. Instead the seller can offer without precommitment a sequence of menus over time. In the two-buyer case where the seller has complete information about each buyer's marginal valuation for quality, the seller's profits exceed what can be obtained from a single menu and sometimes approximate the profits of a perfectly discriminating monopolist. This result is not mere artifact of the assumption of complete information. As we show, even if the seller has incomplete information about the realized distribution of buyer types, he still may obtain higher expected profits (smetimes the entire surplus) by making a sequence of offers rather than a single offer.Center for Research on Economic and Social Theory, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/100831/1/ECON028.pd

On the lease rate, convenience yield and speculative effects in the gold futures market

By examining data on the gold forward offered rate (GOFO) and lease rates over the period 1996- 2009, we conclude that the convenience yield of gold is better approximated by the lease rate than the interest-adjusted spread of Fama & French (1983). Using the latter quantity, we study the relationship between gold leasing and the level of COMEX discretionary inventory and exhibit that lease rates are negatively related to inventories. We also show that Futures prices have increasingly exceeded forward prices over the period, and this effect increases with the speculative pressure and the maturity of the contracts

Collusion through Joint R&D: An Empirical Assessment

This paper tests whether upstream R&D cooperation leads to downstream collusion. We consider an oligopolistic setting where firms enter in research joint ventures (RJVs) to lower production costs or coordinate on collusion in the product market. We show that a sufficient condition for identifying collusive behavior is a decline in the market share of RJV-participating firms, which is also necessary and sufficient for a decrease in consumer welfare. Using information from the US National Cooperation Research Act, we estimate a market share equation correcting for the endogeneity of RJV participation and R&D expenditures. We find robust evidence that large networks between direct competitors – created through firms being members in several RJVs at the same time – are conducive to collusive outcomes in the product market which reduce consumer welfare. By contrast, RJVs among non-competitors are efficiency enhancing

Load carrying capacity of a heterogeneous surface bearing

It has been shown before that liquids can slip at a solid boundary, which prompted the idea that parallel-surfaces bearings can be achieved just by alternating slip and non-slip regions in the direction of fluid flow. The amount of slip at the wall depends on the surface tension at the liquid–solid interface, which in turn depends on the chemical state of the surface and its roughness. In the present study a heterogeneous surface was obtained by coating half of a circular glass disc with a coating repellant to glycerol. A rotating glass disc was placed at a known/calibrated distance and the gap was filled with glycerol. With the mobile surface moving from the direction of slip to non-slip region it can be theoretically shown that a pressure build up can be achieved. The pressure gradient in the two regions is constant, similar to that in a Rayleigh step bearing, with the maximum pressure at the separation line. The heterogeneous disc was placed on a holder supported by a load cell thus the force generated by this pressure increase can be measured accurately. Tests were carried out at different sliding speeds and gaps and the load carried was measured and subsequently compared with theoretical calculations. This allowed the slip coefficient to be evaluated

Cloud computing and RESERVOIR project

The support for complex services delivery is becoming a key point in current internet technology. Current trends in internet applications are characterized by on demand delivery of ever growing amounts of content. The future internet of services will have to deliver content intensive applications to users with quality of service and security guarantees. This paper describes the RESERVOIR project and the challenge of a reliable and effective delivery of services as utilities in a commercial scenario. It starts by analyzing the needs of a future infrastructure provider and introducing the key concept of a service oriented architecture that combines virtualisation-aware grid with grid-aware virtualisation, while being driven by business service management. This article will then focus on the benefits and the innovations derived from the RESERVOIR approach. Eventually, a high level view of RESERVOIR general architecture is illustrated