Explaining higher education progress through risk dominance in an n-person coordination (Stag Hunt) game

In this paper, we use HARSANYI and SELTEN (1988)’s risk dominance concept to explain the growth in the Portuguese higher education system during two time periods: 1998 - 2005 and 2005-2018. During the first time period, the high annual growth rate in tertiary schooling (8.2%) can be accounted for by a n – person, k – coordination Stag Hunt game framework. Hence, the progress in university education can be described as the outcome of a noncooperative game, where youngsters and their families can take decisions without needing to communicate previously. By contrast, during 2005-2018, the former coordination game seems inadequate to rationalize the continued progress in college schooling at an annual rate of 5%, since the wage premium of tertiary education fell drastically (more than 20%) during the same interval. Hence, we switch to an “unanimity” game as framework of analysis. Within such a game, the widespread tertiary enrolment can be accounted for a diminishing “unanimity” requirement, derived from a shrinking demography and the sheer cumulative effect of past spread of college education. We apply here NASH (1950, 1953)’s intuition that the selection of an equilibrium point within an unanimity game is a tool for modelling the outcome of a game, where the players discuss in order to reach an agreement. Hence, we can describe the rise in college education in Portugal in the more recent time period as the outcome of a cooperative process, leading to a wide policy consensus.info:eu-repo/semantics/publishedVersio

Agglomeration in a Vertically-linked Oligopoly

This paper examines the location of three vertically-linked firms. In a spatial economy composed of two regions, a monopolist firm supplies an input to two consumer goods firms that compete in quantities. The interaction between the firms is modelled by means of a three-stage game, where the firms first select locations, then the upstream firm chooses thedelivered prices of the intermediate good, and finally the downstream firms select quantities of the final good. It is concluded that agglomeration is more likely to occur when the ratio between the transport cost of the intermediate good and the transport cost of the final good is higher. If this proportion is low, the existence of an agglomeration varies nonmonotonically with transport costs.Agglomeration; Intermediate Goods; Spatial Oligopoly.

A theory of the relationship between foreign direct investment and trade

Although empirical evidence shows that the relationship between foreign direct investment (FDI) and trade is complex, theories of international investment (both vertical and horizontal) present simple patterns of relation. By allowing for different locations of vertically-related stages of production and distinguishing between trade in finished goods and trade in intermediate goods, this paper introduces a non monotonic relationship between multinational firms and trade costs, which must be neither too high nor too low for FDI to arise. Exports and FDI be have as complements for high levels of trade costs and as substitutes otherwise. J.E.L. Classification: F23, F12, C72. Keywords: Foreign Direct Investment, Multinationals, Trade, Intermediate Goods, Non cooperative Games.

Agglomeration and comparative advantage in vertically-related firms

This paper models, in game-theoretical terms, the location of two vertically-linked monopolistic firms in a spatial economy formed by a large, high labor cost country and a relatively small, low labor cost country. It is found that the decrease in transport costs shifts firms towards the low production cost country. This process takes two different forms: in labor-intensive industries it leads to spatial fragmentation; in industries with strong input-output relations, agglomerations are conserved, although they shift toward the low labor cost country.Location; Intermediate goods; Agglomeration; Comparative advantage.

Vertical Linkages and Multinational Plant Size

This paper deals with the location of input supply in a two country spatial economy. A duopoly supplies intermediate goods to a perfectly competitive consumer good industry that operates with a quadratic production function inspired in PENG, THISSE and WANG (2006). Since the consumer good is non-tradable, the downstream industry locates in both countries and can be viewed as made by a set of multinational firms. On the one hand joint location of the upstream firms is caused by a localization economy and by the intensity of the demand addressed to the industry. On the other hand production and transport costs of the input lead to dispersed locations by the upstream firms. If the input suppliers agglomerate, the neighboring downstream plant operates with a larger size that the distant one. Key words: Vertically-linked industries; Location; Oligopoly; Transport Costs

Networks and Firm Location

This paper models the decision of vertically-linked firms to build either partitioned or connected networks of supply of an intermediate good. In each case, the locations of upstream and downstream firms are correlated. Input specificity is related both to variable costs (transport costs of the input) and fixed costs (learning costs of the use of the input). When both are low, a connected network emerges and a partitioned pattern arises in the opposite case. In the boundary region, there are multiple equilibria, either asymmetric (mixed network) or symmetric.Vertically-linked industries; Intermediate goods; Networks; Input flexibility.

Coaching a regular economics research seminar at Lisbon University in 2010-2011: a groupanalytic approach

This paper describes the implementation of a new protocol for the regular economics seminar run by the Economics Department of ISEG and the research center UECE during academic year 2010-2011. The main innovative features of this protocol were: the introduction of a discussant that explains the paper using a clear, non-technical language, thus giving “holding” to the audience; the requirement that the speaker should be “silent” during the discussion stage, in order to “frustrate” the audience and encourage them to reinterpret the paper presented in a personal way, thus giving “exchange” to the presenter. The new protocol was successful in ensuring a satisficing participation level and had a remarkable effect upon change in learning understandings in the School, namely through the engagement of important professors of ISEG as discussants during the sessions. The main shortcoming was the strength of resistances to change within the seminar team, in particular in what concerns the requirement that the presenter should be “outside” the group during the discussion stage.Learning group coaching; Holding; Exchange; Tolerance to frustration; Resistance to change; Rhetorics. Classification-A12, A13,A23,A29.

Location of Upstream and Downstream Industries

This paper studies the issue of agglomeration versus fragmentation of vertically related industries. While the downstream industry works under perfect competition, the upstream industry is a duopoly where each firm supplies a differentiated input to the competitive firms. These process the inputs under a quadratic production function entailing decreasing returns as in PENG, THISSE and WANG (2006). It is found that fragmentation occurs if the transport cost of final goods is medium to high, while the transport cost of inputs is low. Otherwise, agglomeration prevails. Multiple agglomerated equilibria are possible if the transport cost of intermediate goods is either medium or high.Oligopoly; Vertically-Linked Firms; Location; Spatial Fragmentation.

A theory of the relationship between foreign direct investment and trade

Although empirical evidence shows that the relationship between foreign direct investment (FDI) and trade is complex, theories of international investment (both vertical and horizontal) present simple patterns of relation.By allowing for different locations of vertically-related stages of production and distinguishing between trade in finished goods and trade in intermediate goods, this paper introduces a nonmonotonic relationship between multinational firms and trade costs, which must be neither too high nor too low for FDI to arise. Exports and FDI behave as complements for high level of trade costs and as substitutes otherwise.