749 research outputs found
Co-Production and Managed Competition in Mixed Quasi-markets
In this paper, we provide a very simple model to shed light on the
issue of managed competition in mixed quasi-markets (i.e. regulated markets
in which social and for-proÖt Örms coexist). In doing this, we consider the
literature on mixed oligopolies as a reasonable reference point and try to enrich it
with the idea of quasi-market. Firstly, our results show that social Örms serve the
relatively richer portion of the population. Only relatively poor consumers buy
units of service from the proÖt-oriented Örm. Secondly, the socially-preferable
form of managed competition is to introduce coproduction practices and, hence,
to raise proÖt-oriented ÖrmÃs production costs. The diffusion of coproduction paradigms ensures maximal service quality and eliminates mark-up from the market
Bertrand versus Cournot with Convex Variable Costs
Within a simple model of homogeneous oligopoly, we show that the traditional ranking between Bertrand and Cournot equilibria may be reversed. For price setting entails a continuum of price equilibria under convex variable costs, departure from marginal cost pricing may be observed. As a consequence, Bertrand-Nash equilibrium profits (welfare) may be higher (lower) than Cournot-Nash ones. The reversal of the standard rankings occurs when pricing strategies mimic collusive behaviour
Horizontal Mergers with Capital Adjustments: Workers' Cooperatives and the Merger Paradox
We study the incentives towards horizontal merger among firms when the amount of capital is the strategic variable. The type of firms we focus on is workers' cooperatives, but our conclusions apply also to employment-constrained profit maximisers. Within a simple oligopoly model, we prove that the horizontal merger, for any merger size, is: (i) privately efficient for insiders as well as for outsiders; (ii) socially efficient if market size is large
enough, including the case of merger to monopoly
Cournot Retrouvé under Price or Supply Function Competition
This paper aims at participating in the long-lasting debate about the analytical foundations of the Cournot equilibrium. In a homogeneous oligopoly, under standard regularity conditions, we prove that Cournot-Nash emerges both under (i) price competition and Cournot conjectures; and (ii) supply function competition with ex post market clearing. We demonstrate both results within a model of exogenous product differentiation
On the collusive nature of managerial contracts based on comparative performance
We show that managerial delegation based upon comparative performance may generate collusive outcomes observationally equivalent to those typically associated with repeated games or cross ownership. This happens when rivals\u2019 profits are positively weighted in the managerial incentive scheme. We also identify the level of time discounting at which a repeated game based upon Nash reversion would achieve the same degree of collusion. Accordingly, such managerial contracts should attract the attention of antitrust authoritie
Optimal firms' mix in oligopoly with twofold environmental externality
We charaterise the socially optimal mix of firms in an oligopoly with both profit-seeking and labour-managed firms.
The policy maker faces a twofold externality: (i) production entails the exploitation of a common pool natural resource and (ii) production/consumption pollutes the environment. We study the relationship between firms' mix and social welfare in the Cournot-Nash equilibrium of the industry and the resulting policy implications
Nationalization as credible threat against tacit collusion
Within a simple model of differentiated oligopoly, we show that tacit collusion may be prevented by the threat of nationalising a private firm coupled with the appropriate choice of the weight given to private profits in the maximand of the nationalised company. We characterise the properties of such a threat and prove that it may allow to credibly deter tacit collusion
Optimal Participation Income and Negative Income Tax in poverty Alleviation Programs
We compare two different redistributive policies specifically designed to alleviate poverty. The first one is inspired to the idea of participation income, the second focused on the introduction of a negative income tax. Briefly characterizing an economy with workers and non-workers and using income as evaluation space for poverty, we determine optimality conditions of both measures under a flat rate labor income tax. Finally, we emphasize a necessary condition for these measures to mitigate poverty
On the Observational Equivalence of Unilateral Delegation Contracts in Duopoly
In a Cournot duopoly, if only one firm hires a manager while the other remains entrepreneurial, the Cournot-Stackelberg equilibrium emerges, with the managerial firm as the leader. This happens under at least three different delegation schemes. We illustrate the different meachanisms driving this outcome through the analysis of the map of best replies at the market stage
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