Bargaining and Collusion in a Regulatory Model

We consider the regulation of a monopolistic market when the prin- cipal delegates to a regulatory agency two tasks: the supervision of the firm's unknown costs and the arrangement of a pricing mechanism. As usual, the agency may have an incentive to hide information from the principal to share the informative rent with the firm. The novelty of this paper is that both the regulatory mechanism and the side con- tracting between the agency and the firm are modelled as a bargaining process. This negotiation between the regulator and the monopoly induces a radical change in the extraprofit from private information, which is now equal to the standard informational rent weighted by the agency’ bargaining power. This in turn a¤ects the collusive stage, in particular the firm has the greatest incentive to collude when fac- ing an agency with the same bargaining power. Then, we focus on the optimal organizational responses to the possibility of collusion. In our setting, where incompleteness of contracts prevents the design of a screening mechanism between the agency’ types and thus Tirole’ equivalence principle does not apply, we prove that the stronger the agency in the negotiation process, the greater the incentives for the principal to tolerate collusion in equilibrium.regulation, bargaining, collusion.

Bargaining and Collusion in a Regulatory Model

Within a standard three-tier regulatory model, a benevolent prin- cipal delegates to a regulatory agency two tasks: the supervision of the …rms (two-type) costs and the arrangement of a pricing mecha- nism. The agency may have an incentive to manipulate information to the principal to share the gains of collusion with the …rm. The novelty of this paper is that both the regulatory mechanism and the side contracting between the agency and the …rm are modelled as a bargaining process. While as usual the ine¢ cient …rm does not have any interest in cost manipulation, we …nd that the e¢ cient …rm has an incentive to collude only if the agencys bargaining power is high enough, and the total gains of collusion are now lower than those the two partners would appropriate if the agency could make a take-it-or- leave-it o¤er. Then, we focus on the optimal institutional responses to the possibility of collusion. In our setting, where the incomplete- ness of contracts prevents the principal from designing of a screening mechanism and thus Tiroles equivalence principle does not apply, we show how the playersbargaining powers crucially drive the optimal response to collusion.bargaining, collusion, regulation

Qualitative analysis of the dynamics of the time delayed Chua's circuit

IEEE TRANS. CIRCUITS SYST.

Equilibrium analysis of cellular neural networks

Cellular neural networks are dynamical systems, described by a large set of coupled nonlinear differential equations. The equilibrium point analysis is an important step for understanding the global dynamics and for providing design rules. We yield a set of sufficient conditions (and a simple algorithm for checking them) ensuring the existence of at least one stable equilibrium point. Such conditions give rise to simple constraints, that extend the class of CNN, for which the existence of a stable equilibrium point is rigorously proved. In addition, they are suitable for design and easy to check, because they are directly expressed in term of the template elements

Bargaining and collusion in a regulatory relationship

We investigate regulation as the outcome of a bargaining process between a regulator and a regulated firm. The regulator is required to monitor the firm’s costs and reveal its information to a political principal (Congress). In this setting, we explore the scope for collusion between the regulator and the firm, which results in the manipulation of the regulator’s report on the firm’s costs to Congress. The firm’s bene.t of collusion arises from the higher price the efficient firm is allowed to charge when the regulator reports that it is inefficient. However, a higher price reduces the gains from trade the parties can share in the bargaining process. As a result of this trade-off, the efficient firm has a stake in collusion only if the regulator’s bargaining power in the regulatory relationship is relatively high. Then, we derive the optimal institutional response to collusion and characterize the conditions under which allowing collusion is desirable

A Classic Type 2 QSO

In the Chandra Deep Field South 1Msec exposure we have found, at redshift 3.700 +- 0.005, the most distant Type 2 AGN ever detected. It is the source with the hardest X-ray spectrum with redshift z>3. The optical spectrum has no detected continuum emission to a 3sigma detection limit of ~3 10^{-19} ergs/s/cm^2/AA and shows narrow lines of Ly_alpha, CIV, NV, HeII, OVI, [OIII], and CIII]. Their FWHM line widths have a range of ~700-2300 km/s with an average of approximately ~1500 km/s. The emitting gas is metal rich (Z ~2.5-3 Z_solar). In the X-ray spectrum of 130 counts in the 0.5-7 keV band there is evidence for intrinsic absorption with N_H > 10^{24} cm^{-2}. An iron K_alpha line with rest frame energy and equivalent width of ~6.4 keV and ~1 keV, respectively, in agreement with the obscuration scenario, is detected at a 2sigma level. If confirmed by our forthcoming XMM observations this would be the highest redshift detection of FeK_alpha. Depending on the assumed cosmology and the X-ray transfer model, the 2-10 keV rest frame luminosity corrected for absorption is ~10^{45 +- 0.5} ergs/s, which makes our source a classic example of the long sought Type 2 QSOs. From standard population synthesis models, these sources are expected to account for a relevant fraction of the black-hole-powered QSO distribution at high redshift.Comment: 24 LaTeX pages including 6 postscript figures. Revised version, accepted by Ap

How cooperation between EU states shapes counterterrorism policies

Cooperation between EU states has become increasingly important in the fight against terrorism. But what types of cooperation are most beneficial? Drawing on a new study, Mario Gilli and Paolo Tedeschi find that intelligence cooperation is associated with more efficient defensive policies than unanimous political cooperation

The Chandra Deep Field South: the 1 Million Second

We present the main results from our 940 ksec observation of the Chandra Deep Field South (CDFS), using the source catalog described in an accompanying paper (Giacconi et al. 2001). We extend the measurement of source number counts to 5.5e-17 erg/cm^2/s in the soft 0.5-2 keV band and 4.5e-16 erg/cm^2/s in the hard 2-10 keV band. The hard band LogN-LogS shows a significant flattening (slope~=0.6) below ~1e-14 erg/cm^2/s, leaving at most 10-15% of the X-ray background (XRB) to be resolved, the main uncertainty lying in the measurement of the total flux of the XRB. On the other hand, the analysis in the very hard 5-10 keV band reveals a relatively steep LogN-LogS (slope ~=1.3) down to 1e-15 erg/cm^2/s. Together with the evidence of a progressive flattening of the average X-ray spectrum near the flux limit, this indicates that there is still a non negligible population of faint hard sources to be discovered at energies not well probed by Chandra, which possibly contribute to the 30 keV bump in the spectrum of the XRB. We use optical redshifts and identifications, obtained with the VLT, for one quarter of the sample to characterize the combined optical and X-ray properties of the CDFS sample. Different source types are well separated in a parameter space which includes X-ray luminosity, hardness ratio and R-K color. Type II objects, while redder on average than the field population, have colors which are consistent with being hosted by a range of galaxy types. Type II AGN are mostly found at z<~1, in contrast with predictions based on AGN population synthesis models, thus suggesting a revision of their evolutionary parameters.Comment: Accepted by The Astrophysical Journal, 24 pages, 8 figures, 1 color jpg plate (fig.1

Discovery Of Cold, Pristine Gas Possibly Accreting Onto An Overdensity Of Star-Forming Galaxies At Redshift z ~ 1.6

We report the discovery of large amounts of cold (T ~ 10^4 K), chemically young gas in an overdensity of galaxies at redshift z ~ 1.6 in the Great Observatories Origins Deep Survey southern field (GOODS-S). The gas is identified thanks to the ultra-strong Mg II absorption features it imprints in the rest-frame UV spectra of galaxies in the background of the overdensity. There is no evidence that the optically-thick gas is part of any massive galaxy (i.e. M_star > 4x10^9 M_sun), but rather is associated with the overdensity; less massive and fainter galaxies (25.5 < z_850 < 27.5 mag) have too large an impact parameter to be causing ultra-strong absorption systems, based on our knowledge of such systems. The lack of corresponding Fe II absorption features, not detected even in co-added spectra, suggests that the gas is chemically more pristine than the ISM and outflows of star-forming galaxies at similar redshift, including those in the overdensity itself, and comparable to the most metal-poor stars in the Milky Way halo. A crude estimate of the projected covering factor of the high-column density gas (N_H >~ 10^20 cm-2) based on the observed fraction of galaxies with ultra-strong absorbers is C_F ~ 0.04. A broad, continuum absorption profile extending to the red of the interstellar Mg II absorption line by <~ 2000 km/s is possibly detected in two independent co-added spectra of galaxies of the overdensity, consistent with a large-scale infall motion of the gas onto the overdensity and its galaxies. Overall, these findings provides the first tentative evidence of accretion of cold, chemically young gas onto galaxies at high redshift, possibly feeding their star formation activity. The fact that the galaxies are members of a large structure, as opposed to field galaxies, might play a significant role in our ability to detect the accreting gas.Comment: 57 pages, 17 figures, 1 table; accepted for publication by ApJ (Aug 9, 2011); minor modifications to match the accepted versio

Iterated Admissibility as Solution Concept in Game Theory

Admissibility, i.e. the deletion of weakly dominated strategies, is a highly controversia1 solution concept for non cooperative games. This paper proposes a complete theory of weak dominance and, contrary to almost al1 the literature on this topic, it provides positive results on foundations of iterated admissibility. The main contribution of this work is to show that (iterated) admissibility can be justified once payoffs' ties are seriously taken into considerations and players optimise taking into consideration the information provided by these ties, i.e. using strategic independent sets (Mailath at al. 1993) and conditional dominance (Shimoji and Watson 1998). In particular we prove that (iterated) maximal simultaneous deletion of weakly dominated strategies endogenously emerges as axiomatic characterization of iterated admissibility. As a consequence of this result, the paper provides axiomatic and Bayesian foundations of iterated admissibility, proves the logical consistency of (iterated) admissibility as solution concept in game theory, and that common knowledge of admissibility leads to iterated admissibility, showing why previous attempts using cautious behaviour were ineffective.admissibility, axiomatic and Bayesian foundations, logical consistency, cautious behaviour