Financing Start-ups: Advising vs. Competing

High-tech start-ups get external finance and guidance mostly from venture capitalists and/or business angels. We identify a simultaneous double moral hazard for the management style of entrepreneurs and the decision to advise the firm for financiers. We embed this relationship into the financial competition where strategic choices are equity shares, liquidation rights and quality of advising. We show that the financier holds all liquidation rights, that more competition weakly decreases the financier's equity share. Surprisingly, the response in advising quality is non-monotone. In a regime of soft competition, the financier owns the start-up and more competition weakens advising quality. In a regime of acute competition, more competition improves advising quality and lowers the financier's equity share in the start-up. Hence, advising and equity, are substitutes at the industry level once competition effects are taken into account.Start-ups, Contract Design, Equity, Oligopoly Competition

Export Restraints and Horizontal Product Differentiation

We consider the effects of export restraints on price competition in the Hotelling model of horizontal differentiation. We characterize the Nash equilibrium for all possible values of the quota and compare our results with those of Krishna (89). We show that a foreign producer would choose a VER in the vicinity of the Free Trade Equilibrium. In order to maximize domestic welfare, a government would necessarily choose complete protectionism nor Free Trade.Hotelling; optimal quota; price competition

Regulating quality by regulating quantity : a case against minimum quality standards

We show in a simple model of entry with sunk cost, that a regulator prefers limiting the output, or capacity, of the incumbent firm rather than imposing a "Minimum Quality Standard" in order to help the entrant to provide high quality. As a by-product, our analysis makes a contribution to the study of Bertrand-Edgeworth competition in a market with differentiated products.quality, minimum quality standards, price competition

Sales Restriction, Quality Selection and the Mode of Competition

A regulator imposing "sales restrictions" on firms competing in oligopolistic markets may enhance quality provision by the firms. Moreover, for most restrictions levels, the impact on quality selection is invariant to the mode of competition.Quality; Quota; Oligopolistic Competition

Asymmetries of information in centralized order-driven markets

We study the efficiency of the equilibrium price in a centralized, order-driven market where many asymmetrically informed traders are active for many periods. We show that asymmetries of information can lead to sub-optimal information revelation with respect to the symmetric case. In particular, we assess that the more precise the information the higher the incentive to reveal it, and that the value of private information is related to the volume of exogenous trade present on the market. Moreover, we prove that any informed trader, whatever his information, reveals his private signal during an active phase of the market, concluding that long pre-opening phases are not effective as an information discovering device in the presence of strategic players.Asymmetric information; pre-opening; insider trading

The Hotelling Model with Capacity Precommitment

We consider the two-stage game proposed by Kreps and Scheinkman (83) in the address-model of horizontal differentiation developed by Hotelling. Firms choose capacities in the first stage and then compete in prices. We show that price competition is drastically softened since in almost all subgame perfect equilibria firms behave as if they were an integrated monopolist i.e., they choose capacities which exactly cover the market, so that there is no room for price competition. If furthermore the installation cost for capacity is one fourth of the transportation or more, this result stands for all SPE. Like Kreps and Scheinkman, we show that the Cournot allocations coincide with the SPE allocations of our game form. Finally, our analysis provides an interesting treatment of mixed strategy equilibria which is quite new in the literature.Hotelling; capacity; price competition

Entry accommodation under multiple commitment strategies: judo economics revisited

We consider a stage-game where the entrant may simultaneously commit to its product's quality and the level of its production capacity before price competition takes place. We show that capacity limitation is more effective than quality reduction as a way to induce entry accommodation: the entrant tends to rely exclusively on capacity limitation in a subgame perfect equilibrium. This is so because capacity limitation drastically changes the nature of price competition by introducing local strategic substitutability whereas quality differentiation only alters the intensity of price competition.entry, quality, differentiation, Bertrand-Edgeworth competition

Asymmetries of Information in Electronic Systems

We study the efficiency of the equilibrium price in a centralized, order-driven market where asymmetrically informed traders are active for several periods and can observe each other current and past orders, as in electronic systems of trading. We show that the more precise the information the higher the incentive to reveal it in the first trading rounds. On the contrary, strategic competition forces the less informed trader to wait the end of the trading period to reveal his information. This implies that when differences in information quality are very important, the liquidity of the market decreases as we approach the date of public revelation. We are able to show that more transparent markets as the ones organized via electronic systems are not performing better than markets organized on floor trade in terms of revelation of information, due to the oligopolistic behavior of insidersasymmetric information, liquidity, insider trading, strategic revelation

Surface Resistance Measurements of Superconducting Niobium Samples with a Triaxial Cavity

This experimental study has revealed and investigated many of the physical issues that affect accurate measurement of the surface resistance for small samples consisting of superconducting niobium films on copper substrates. It is believed that this work provides the groundwork for future research directed towards solving this important problem. Accurate measurement of surface resistance for such samples is needed to allow the rapid evaluation and optimization of the deposition parameters necessary for manufacturing low-loss superconducting niobium films. A superconducting niobium triaxial cavity was investigated to determine its suitability for measuring the residual surface resistance of copper samples that were sputter-coated with niobium. Apiezon and GE varnish were found to be inadequate to bond the sample to the endplate of the test chamber. A new method using a screw bonded to the sample and a threaded hole in the endplate was designed to solve these problems. However, electromagnetic simulations indicated that losses from the backside of such a sample might be significant for low-loss films. These effects were investigated using in-situ tuning of the cavity\u27s frequency for samples coated alternately on one and two sides. The surface resistance was found to be frequency-dependent and higher than anticipated. Bulk niobium samples were tested to eliminate the possibility of backside losses. These samples also gave high surface resistances. Experiments were performed to assess losses in the bonding agent between the screw and sample and to assess losses in the screw. The thermal impedance between the sample and endplate was also investigated. These possibilities did not explain the observed losses. To eliminate extraneous losses from the installation method, bulk niobium samples were bonded to the endplate with GE varnish. The loss was found to be dependent on the frequency and higher than anticipated. Localized losses at the edge were discovered. The endplate flange was redesigned to allow the entire endplate to be replaced to eliminate the possibility of edge losses. While lower surface resistances were achieved with this method, they were still much higher than anticipated. These results indicate that some anomalous loss mechanism is present even in the absence of edge losses