One-Way Compatibility, Two-Way Compatibility and Entry in Network Industries

We study the strategic choice of compatibility between two initially incompatible network goods in a two-stage game played by an incumbent and an entrant firm. Compatibility may be achieved by means of a converter. We derive a number of results under different assumptions about the nature of the converter (one-way \emph{vs} two-way) and the existence of property rights. In the case of a two-way converter, which can only be supplied by the incumbent, incompatibility will result in equilibrium. When both firms can build a one-way converter and there are no property rights on the necessary technical specifications, the unique equilibrium involves full compatibility. Finally, when each firm has property rights on its technical specifications, full incompatibility and preemption are again observed at the equilibrium. With incompatibility, entry deterrence occurs for sufficiently strong network effects. The welfare analysis shows that the equilibrium compatibility regime is socially inefficient for most levels of the network effects.Network externalities, one-way compatibility, two-way compatibility, entry

Plastic Clashes: Competition among Closed and Open Systems in the Credit Card Industry.

This paper analyses market competition between two different types of credit card platforms: not-for-profit associations and proprietary systems. The main focus is on the role of the interchange fee set by not-for-profit platforms. We show that when the interchange fee is set so as to maximise the sum of issuers' and acquirers' profits, the equilibrium values of platforms' profits, of the sum of the fees charged by each platform and their market shares are independent of the competitive conditions within the not-for-profit platform and are affected by the strength of inter-platform competition. We also show that the imposition of a ban on the setting of the interchange fee has ambiguous effects on the profit of the proprietary system.two-sided markets, network externalities, credit cards, interchange fee

One-Way Compatibility, Two-Way Compatibility and Entry in Network Industries

We study the strategic choice of compatibility between two initially incompatible software packages in a two-stage game by an incumbent and an entrant firm. Consumers enjoy network externality in consumption and maximise expected surplus over the two periods. Compatibility may be achieved by means of a converter. We derive a number of results under diÆerent assumptions about the nature of the converter (one-way vs two-way) and the existence of property rights. In the case of a two-way converter, which can only be supplied by the incumbent, incompatibility will result in equilibrium and depending on the strength of network externalities the incumbent may deter entry. When both firms can build a one-way converter and there are no property rights on the necessary technical specifications, the only fulfilled expectations subgame perfect equilibrium involves full compatibility. Finally, when each firm has property rights on its technical specifications, full incompatibility and preemption are again observed at the equilibrium. Entry deterrence will then occur for su±ciently strong network eÆects. The analysis generalises to any market where network externalities are present.

The Evolution of Consistent Conjectures.

In this paper we model the evolution of conjectures in an economy consisting of a large number of firms which meet in duopolies. The duopoly game is modelled by the conjectural variation (CV) model. An evolutionary process leads to more profitable conjectures becoming more common (payoff monotone dynamics). Under payoff monotonic dynamics, convergence occurs to a small set of serially undominated strategies containing the consistent onjecture. This set can be made arbitrarily small by appropriate choice f the strategy set. If the game is dominance solvable, then the dynamics converges globally to the unique attractor.

Coordination and Equilibrium selection in mean defined supermodular games under payoff monotonic selection dynamics

This paper introduces the class of mean defined supermodular games. The characteristic feature of these games is that, given an order on the strategy sets of the players, the payoff to each player depends on his own strategy and the average of the population play. We characterise the set of the Nash equilibria and analyse their dynamic properties under payoff monotonic selection dynamics. Weak Nash equilibria, both in pure and mixed strategies, are unstable. The only asymptotically stable equilibria of the game are symmetric strict equilibria where each player uses the same strategy. We show that the strategies that do not survive the process of iterated deletion of strictly dominated strategies vanish in the long run. As a corollary to this latter result, we show that if the game is dominance solvable then the dynamics converges from any initial interior state.Strategic complementarities, supermodular games, bounded rationality, replicator dynamics, coordination failures.

Public-Private Participation in Energy Infrastructure in Middle East and North African Countries: The Role of Institutions for Renewable Energy Sources Diffusion

Investment in infrastructure, although historically dominated by public intervention, are experiencing a growing role for public and private partnership. This trend traced a steady increase since the start of privatization and liberalization process that took place in most OECD countries in the 90s and peaked in 2012. Middle East and North African (MENA) countries are hungry for infrastructural investment, but looking at the consolidated global trends in energy investment, it emerges that its performance is particularly poor in attracting private participation. However, Morocco was able to figure among the top destination countries for energy investment. Together with Jordan they represent the only two countries able to attract energy investment in the region mostly in renewable energy technology. Evidence shows that Morocco and Jordan are those that perform better in terms of political stability score and rule of law score according to the World Bank. The institutional and political endowment in MENA countries appear to be inappropriate to secure the level of infrastructural investment in the energy sector, in particular when dominated by long lead times and irreversibility. In this context, renewable energy sources investment offer a valid alternative, when the necessary pre-conditions are put in place and when the regulatory design is able to offset, at least partially, the higher country risk that investor are likely to face. Keywords: Public Private Partnership, Investment, Middle East and North Africa, Energy Transition, Institutional Endowment, Renewable Energy Sources Investment JEL Classifications: D02, L43, O1

Economic Interplay Forecasting Business Success

A startup ecosystem is a dynamic environment in which several actors, such as investors, venture capitalists, angels, and facilitators, are the protagonists of a complex interplay. Most of these interactions involve the flow of capital whose size and direction help to map the intricate system of relationships. This quantity is also considered a good proxy of economic success. Given the complexity of such systems, it would be more desirable to supplement this information with other informative features, and a natural choice is to adopt mathematical measures. In this work, we will specifically consider network centrality measures, borrowed by network theory. In particular, using the largest publicly available dataset for startups, the Crunchbase dataset, we show how centrality measures highlight the importance of particular players, such as angels and accelerators, whose role could be underestimated by focusing on collected funds only. We also provide a quantitative criterion to establish which firms should be considered strategic and rank them. Finally, as funding is a widespread measure for success in economic settings, we investigate to which extent this measure is in agreement with network metrics; the model accurately forecasts which firms will receive the highest funding in future years

Intracranial Hemorrhage from Dural Arteriovenous Fistulas: What Can We Find with CT Angiography?

Background: Dural arteriovenous fistulas (DAVF) represent a rare acquired intracranial vascular malformation, with a variety of clinical signs and symptoms, which make their diagnosis difficult. Intracranial hemorrhage is one of the most serious clinical manifestations. In this paper the authors’ goal was to verify the accuracy and utility of contrast-enhanced brain CT angiography (CTA) for the identification and the characterization of dural arteriovenous fistulas (DAVFs) in patients who presented with brain hemorrhage compared to 3D digital subtraction angiography (3D DSA); (2) a retrospective study of 26 patients with DAVFs who presented with intracranial hemorrhage to our institution was performed. The information reviewed included clinical presentation, location and size of hemorrhage, brain CTA and 3D DSA findings; (3) results: 61% (16/26) of DAVFs were identified by CTA. The vast majority of patients were male (69%, 18/26) and the most common presenting symptom was sudden onset headache. All DAVFs had cortical venous drainage and about one-third were associated with a venous varix. The most common location was tentorial (73%, 19/26); (4) conclusions: CTA can represent a valid alternative diagnostic method to 3D DSA for the study of DAVF in the initial and preliminary diagnostic approach, especially in emergency situations. In fact, it represents a fast, inexpensive, non-invasive and above all, easily accessible and available diagnostic technique, unlike DSA or MRI, allowing to provide information necessary for the identification, classification and treatment planning of DAVF