4,138 research outputs found
Decreasing Serial Cost Sharing under Economies to Scale
We consider the problem of cost sharing in the presence of increasing returns to scale and potential strategic behavior on the part of consumers. We show that any smooth and strictly monotonic mechanism for which a Nash equilibrium exists for all profiles of convex and monotonic preferences must be dictatorial. However, we propose a cost sharing mechanism, the decreasing serial mechanism, for which an interesting domain restriction ensures existence of a noncooperative equilibrium for its cost sharing game. A characterization theorem of the mechanism based on the strategic properties of existence, uniqueness, and efficiency of its noncooperative equilibrium is provided.Publicad
Coalitional manipulations in a bankruptcy problem
In a bankruptcy problem framework we consider rules immune to possible manipulations by the creditors involved in the problem via merging or splitting of their individual claims. The paper provides characterization theorems for the non manipulable rules, the no advantageous merging parametric rules and the no advantageous splitting parametric rules.Publicad
Optimal error bounds for two-grid schemes applied to the Navier-Stokes equations
We consider two-grid mixed-finite element schemes for the spatial
discretization of the incompressible Navier-Stokes equations. A standard
mixed-finite element method is applied over the coarse grid to approximate the
nonlinear Navier-Stokes equations while a linear evolutionary problem is solved
over the fine grid. The previously computed Galerkin approximation to the
velocity is used to linearize the convective term. For the analysis we take
into account the lack of regularity of the solutions of the Navier-Stokes
equations at the initial time in the absence of nonlocal compatibility
conditions of the data. Optimal error bounds are obtained
Trade disclosure and price dispersion
This paper determines the effects of post-trade opaqueness on market performance. We find that the degree of market transparency has important effects on market equilibria. In particular, we show that dealers operating in a transparent structure set regret-free prices at each period making zero expected profits in each of the two trading rounds, whereas in the opaque market dealers invest in acquiring information at the beginning of the trading day. Moreover, we obtain that if there is no trading activity in the first period, then market makers only change their quotes in the opaque market. Additionally, we show that trade disclosure increases the informational efficiency of transaction prices and reduces volatility. Finally, concerning welfare of market participants, we obtain ambiguous results
Efficient partnership dissolution under buy-sell clauses
When a partnership comes to an end, partners have to determine the terms of the dissolution. A
well known way to do so is by enforcing a buy-sell clause. Under its rules one party offers a
price for the partnership and the other party chooses whether to sell her share or buy her
partnerÂŽs share at this price. It is well known that in a model with private valuations this
dissolution rule may generate inefficient allocations. However, we show that if partners
negotiate for the advantage of being chooser, then buy-sell clauses result in an ex-post efficient
outcome. We argue that this endogenous selection of the proposer is consistent with how buysell
clauses are drafted in practice. For an example with interdependent valuations, we further
show that the buy-sell clause can perform better than an auction
On Some Myths about Sequenced Common-valued Auctions
Equilibria are constructed for classes of game models of sequenced second-price auctions having identical common-valued objects. In some of these the equilibrium price falls on average, and in others the seller loses on average by committing to announce publicly something that he knows. Both of these possibilities are surprisesPublicad
Risk Aversion, Transparency, and Market Performance
Using a model of market making with inventories based on Biais (1993), we find
that investors obtain more favorable execution prices, and they hence invest more,
when markets are fragmented. In our model, risk-averse dealers use less aggressive
price strategies in more transparent markets (centralized) because quote dissemination
alleviates uncertainty about the prices quoted by other dealers and, hence, reduces the need to compete aggressively for order flow. Further, we show that the move toward greater transparency (centralization) may have detrimental effects on liquidity and welfare.Publicad
Endogenous capacities and price competition: the role of demand uncertainty
This paper analyzes a model of capacity choice followed by price competition under demand uncertainty. Under various assumptions regarding the nature and timing of demand realizations, we obtain general predictions concerning the role of demand uncertainty on equilibrium outcomes. We show that it reduces the multiplicity of equilibria, it may rule out the existence of symmetric equilibria, and it leads to endogenous capacity asymmetries even though firms are ex-ante symmetric. Furthermore, as compared to the certainty equivalent game, demand uncertainty reduces prices and increases consumer surplus, but it also decreases total welfare because of the emergence of idle capacity. By relying on the analysis of firms' reaction functions as well as on the theory of submodular games, we are able to show that a subgame perfect equilibrium always exists and to fully characterize it
Application of the travel cost method to estimate the economic value of cultural goods: Blockbuster art exhibitions
In recent years a growing number of studies have started to apply non-market valuation methods to estimate the economic value of cultural goods. The majority of these studies use stated preference techniques, such as the contingent valuation method. This study discusses the application of the travel cost method to estimate the economic value of a specific type of cultural good: special exhibitions. The empirical work focuses on the touring exhibition the âAges of Mankindâ, one of the first and most representative examples of a blockbuster art exhibition in Spain. This is the first time, as far as we know, that this method has been applied to a large temporary exhibition and is one of the few applications of this method in the valuation of cultural goods.Blockbuster arts exhibitions, non-market valuation, revealed preferences, travel cost method, cultural economics.
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