Industry sunk costs and entry dynamics

We explore an investment game where industry sunk costs provide anincentive for a firm to be a follower into the market as opposedto a leader. For some parameter values, every firm could have adominant strategy to wait, even though immediate entry is sociallyoptimal - this is a like prisoners' dilemma. In equilibrium, afirm is more likely to have a dominant strategy to wait with anincrease in the number of potential entrants. Finally, theequilibrium can display an entry cascade.coordination game

Coordination games and the option to wait

We take a coordination game and add the option to wait each player can opt to take an action in the standard game or they can decide to wait. If one player has taken a standard option, the waiting player can adopt their best response to this action. Interpreting the payoff in the final period (when there is no waiting possible) as a outside option or default, we show that a party's equilibrium payoff can be decreasing in their default. Further, a player''s role of leader or follower alternates as the number of waiting periods changes.

Convection displacement current and alternative form of Maxwell-Lorentz equations

Some mathematical inconsistencies in the conventional form of Maxwell's equations extended by Lorentz for a single charge system are discussed. To surmount these in framework of Maxwellian theory, a novel convection displacement current is considered as additional and complementary to the famous Maxwell displacement current. It is shown that this form of the Maxwell-Lorentz equations is similar to that proposed by Hertz for electrodynamics of bodies in motion. Original Maxwell's equations can be considered as a valid approximation for a continuous and closed (or going to infinity) conduction current. It is also proved that our novel form of the Maxwell-Lorentz equations is relativistically invariant. In particular, a relativistically invariant gauge for quasistatic fields has been found to replace the non-invariant Coulomb gauge. The new gauge condition contains the famous relationship between electric and magnetic potentials for one uniformly moving charge that is usually attributed to the Lorentz transformations. Thus, for the first time, using the convection displacement current, a physical interpretation is given to the relationship between the components of the four-vector of quasistatic potentials. A rigorous application of the new gauge transformation with the Lorentz gauge transforms the basic field equations into an independent pair of differential equations responsible for longitudinal and transverse fields, respectively. The longitudinal components can be interpreted exclusively from the standpoint of the instantaneous "action at a distance" concept and leads to necessary conceptual revision of the conventional Faraday-Maxwell field. The concept of electrodynamic dualism is proposed for self-consistent classical electrodynamics. It implies simultaneous coexistenceComment: ReVTeX file, 29pp., no figure

Ownership, access and sequential investment

We extend the property-rights framework to allow for: a separation of the ownership rights of access and veto; and sequential investment. Parties investing first (ex ante) do so before contracting is possible. Parties that invest second (ex post) can contract on (at least some) of their investment costs. Along with this cost-sharing effect, the incentive to invest is affected by a strategic effect generated by sequential investment. Together these effects can overturn some of the predictions of the property-rights literature. For example, the most inclusive ownership structure might not be optimal, even if all investments are complementary.property rights; access; veto; firm organization; sequential investment; holdup

Economic Voting in Russia's Regions: Are Governors Accountable for Regional Performance?

This project examines the role of economic voting in Russian regional executive elections. Drawing upon the traditional economic voting literature and recent works dealing with electoral accountability, the author derives a set of hypotheses concerning the type of voting behavior necessary to hold regional executives accountable for economic performance outcomes and the patterns of election success expected across regional election cycles under conditions of perfect electoral accountability. These hypotheses are then tested at the individual level through analyses of pre-election surveys drawn from the Samara and Ul'yanovsk oblasts' 2000 elections and at the aggregate level through analyses of the entire population of oblast and krai elections that occurred during the 1996-1997 and 2000-2001 election cycles. In marked contrast to the popular discourse surrounding Russia's regional executive elections, results of the survey and aggregate-level analyses suggest the evolution of the basic behavioral, institutional, and procedural requisites of regional executive accountability. Survey respondents demonstrated rather sophisticated calculi of incumbent support that focused upon the perceived conditions of their regions' economies relative to those of other regions. Furthermore, despite a number of highly publicized election scandals occurring during the 2000-2001 election cycle, cross sectional aggregate level analyses of these elections indicate a pattern of incumbent election success that varied with changes in the living standards of regional pensioners and wage-earners. This study carries a number of important implications for both academic and policy-making circles. From a more academic perspective, it applies the traditional economic voting literature to a new set of election cases, provides the first survey-based analysis of attitudes toward Russian regional executives, and tests critical assumptions regarding executives' accountability for their policy-making decisions. Furthermore, it assesses the effectiveness of regional executive elections as a means to drive economic development and improve regional living standards. Finally, it also provides insights into the causes and justifications for the current re-centralization of federal power under Russian President Vladimir Putin and contributes to contemporary scholarly and policy-related discussions regarding the desirability of elected, as opposed to appointed, regional executives

Innovation in a generalized timing game

We examine innovation as a timing game with complete information and observable actions in which firms decide when to enter a market. We characterize all pure strategy subgame perfect equilibria for the two-player symmetric game. In particular, we describe all subgame perfect equilibria when both the leader’s and the followers’ payoff functions are multi-peaked, non-monotonic and discontinuous. We find that there are potentially multiple equilibria, which could involve: joint adoption by both firms, with and without rent equalization; and, alternatively, single-firm adoption with a second-mover advantage. Economic applications are discussed including process and product innovation and the timing of the sale of an asset

On Broadway and strip malls: how to make a winning team

A successful organization – or Broadway production – needs the right team. A potential issue is that an existing synergy between complementary agents (or assets) can reduce the marginal return of effort, creating a disincentive to invest. While agents always prefer to be in a team of complementary workers, a principal may wish to use non-complementary agents; this can occur if the loss from lower investment is sufficiently large. A principal, however, may opt for non-complementary agents when complementary workers would produce greater surplus. These insights have implications for job rotation, the central­ization versus decentralization of decision making and mergers

Ownership, access and sequential investment

We extend the property-rights framework to allow for: a separation of the ownership rights of access and veto; and sequential investment. Parties investing first (ex ante) do so before contracting is possible. Parties that invest second (ex post) can contract on (at least some) of their investment costs. Along with this cost-sharing effect, the incentive to invest is affected by a strategic effect generated by sequential investment. Together these effects can overturn some of the predictions of the property-rights literature. For example, the most inclusive ownership structure might not be optimal, even if all investments are complementary