Quality and location choices under price regulation

In a model of spatial competition, we analyze the equilibrium outcomes in markets where the product price is exogenous. Using an extended version of the Hotelling model, we assume that firms choose their locations and the quality of the product they supply. We derive the optimal price set by a welfarist regulator. If the regulator can commit to a price prior to the choice of locations, the optimal (second-best) price causes overinvestment in quality and an insufficient degree of horizontal differentiation (compared with the first-best solution) if the transportation cost of consumers is sufficiently high. Under partial commitment, where the regulator is not able to commit prior to location choices, the optimal price induces first-best quality, but horizontal differentiation is inefficiently high

Bilateral oligopoly and quantity competition

Bilateral oligopoly is a market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, bilateral oligopoly approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. \ We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one, and investigate the differences in equilibria otherwise. These results lead to necessary and sufficient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied

The objective of a privately owned firm under imperfect competition

Firm’s objective, Shareholders’ preferences, Imperfect competition, General equilibrium, D21, D43, D51, D70, L21,

Reinforcement vs. change: The political influence of the media

The aim of this paper is to analyze competition between two ideological media outlets that want to influence their viewers so as to boot the number of votes for their preferred political party. We consider two ways of influencing viewers, which correspond to two prominent theories borrowed from the literature on Sociology: the “Reinforcement Approach” and the “Attitudinal Orientations Approach”. Our findings show that the aim of influencing viewers generally pushes media outlets to differentiate their opinions, and that the extend of this differentiation deeply depends on the viewers’ behavior. More precisely, we observe that if the viewers channel hop, media outlets end up differentiating their opinions more than if the viewers receive all their information from just one media. Copyright Springer Science+Business Media, LLC 2007Ideological media, Influence, Channel hopping,