Household behavior and individual autonomy.

The paper proposes a model of household behavior with both private and public consumption where the spouses independently maximize their utilities, but taking into account, together with their own individual budget constraints, the collective household budget constraint with public goods evaluated at Lindahl prices. The Lagrange multipliers associated with these constraints are used to parameterize the set of equilibria, in addition to the usual parameterization by income shares. The proposed game generalizes both the ‘collective’ model of household behavior and the non-cooperative game with voluntary contributions to public goods.Intra-household allocation, household financial management, degree of autonomy, Lindahl prices, local income pooling, separate spheres.

Oligopolistic Competition as a Common Agency Game

In applying the common agency framework to the context of an oligopolistic industry, we want to go beyond the classical dichotomy between Cournot and Bertrand competition. We define two games, the oligopolistic game and the corresponding concept of oligopolistic equilibrium, and an associated auxiliary game that can be interpreted as a common agency game and that has the same set of equilibria. The parameterization of the set of (potential) equilibria in terms of competitive thoughness is derived from the first order conditions of the auxiliary game. The enforceability of monopolistic competition, of price and quantity competition, and of collusion is examined in this framework. We then describe the (reduced) set of equilibria one would obtain, first in the non-intrinsic case and then in the case where a global approach would be adopted instead of partial equilibrium approach. Finally, we illustrate the use of the concept of oligopolistic equilibrium and of the corresponding parameterization by referring to the standard case of symmetric quadratic utility.

Household behavior and individual autonomy: A Lindahl approach.

A comprehensive model of economic household decision is presented which incorporates both fully cooperative and fully non-cooperative variants, parameterized by the income distribution, as well as a semi-cooperative variant, parameterized in addition by a vector B, representing the degrees of individual autonomy. In this comprehensive model, the concept of "household B-equilibrium" is introduced through the reformulation of the Lindahl equilibrium in strategic terms. Existence is proved and some generic properties of the household B-equilibrium derived. An example is given to illustrate. Finally a particular decomposition of the pseudo-Slutsky matrix is derived and the testability of the various models discussed.Intra-household allocation, household financial management, degree of autonomy, Lindahl prices, local income pooling, separate spheres.

Household behavior and individual autonomy

intra-household allocation, household financial management, degree of autonomy, Lindahl prices, local income pooling, separate spheres

Hawks and doves in segmented markets : a formal approach to competitive aggressiveness

Competitive aggressiveness is analyzed in a simple spatial oligopolistic competition model, where each one of two firms supplies two connected markets segments, one captive the other contested. To begin with, firms are simply assumed to maximize profit subject to two constraints, one related to competitiveness, the other to market feasibility. The competitive aggressiveness of each firm, measured by the relative implicit price of the former constraint, is then endogenous and may be taken as a parameter to characterize the set of equilibria. A further step consists in supposing that competitive aggressiveness is controlled by each firm through its manager hiring decision, in a preliminary stage of a delegation game. When competition is exogenously intensified, through higher product substitutability or through larger relative size of the contested market segment, competitive aggressiveness is decreased at the subgame perfect equiibrium. This decrease partially compensates for the negative effect on profitability of more intense competition

Hawks and doves in segmented markets : A formal approach to competitive aggressiveness

Competitive aggressiveness is analyzed in a simple spatial oligopolistic competition model, where each one of two firms supplies two connected market segments, one captive the other contested. To begin with, firms are simply assumed to maximize profit subject to two constraints, one related to competitiveness, the other to market feasibility. The competitive aggressiveness of each firm, measured by the relative implicit price of the former constraint, is then endogenous and may be taken as a parameter to characterize the set of equilibria. A further step consists in supposing that competitive aggressiveness is controlled by each firm through its manager hiring decision, in a preliminary stage of a delegation game. When competition is exogenously intensified, through higher product substitutability or through larger relative size of the contested market segment, competitive aggressiveness is decreased at the subgame perfect equilibrium. This decrease partially compensates for the negative effect on profitability of more intense competition.

Hawks and doves in segmented markets: a formal approach to competitive aggressiveness

Competitive aggressiveness is analyzed in a simple spatial oligopolistic competition model, where each one of two firms supplies two connected market segments, one captive the other contested. To begin with, firms are simply assumed to maximize profit subject to two constraints, one related to competitiveness, the other to market feasibility. The competitive aggressiveness of each firm, measured by the relative implicit price of the former constraint, is then endogenous and may be taken as a parameter to characterize the set of equilibria. A further step consists in supposing that competitive aggressiveness is controlled by each firm through its manager hiring decision, in a preliminary stage of a delegation game. When competition is exogenously intensified, through higher product substitutability or through larger relative size of the contested market segment, competitive aggressiveness is decreased at the subgame perfect equilibrium. This decrease partially compensates for the negative effect on profitability of more intense competition.

On stabilization policy in sunspot-driven oligopolistic economies

Economies with oligopolistic markets are prone to inefficient sunspot fluctuations triggered by autonomous changes in firms equilibrium conjectures. We show that a well designed taxation-subsidization scheme can eliminate these fluctuations by coordinating firms in each sector on a single efficient equilibrium. At the macroeconomic level, implementing this stabilization policy leads to significant welfare gains, attributable to a quantitatively dominant "efficient stabilization effect". This effect, while important, is typically ignored in the traditional computations of the welfare costs of aggregate fluctuations (e.g., Lucas, 2003)

Free entry equilibria with positive profits: A unified approach to quantity and price competition games

Free entry equilibria are usually characterized by the zero profit condition. We plead instead for a strict application of theNash equilibriumconcept to a symmetric simultaneous game played by actual and potential entrants, producing under decreasing average cost. Equilibrium is then typically indeterminate, with a number of active firms varying between an upper bound imposed by profitability and a lower bound required by sustainability. We use a canonical model with strategies represented by prices, although covering standard regimes of quantity and price competition, to show that in equilibrium the critical (profit maximizing) price must lie between the break-even and the limit prices

Competition and the risk of bank failure: breaking with the representative borrower assumption

We examine the relation between intensity of competition in the loan market and risk of bank failure, in a model with adverse selection. As well established, the presence of the two opposite margin and risk-shifting effects creates conditions for nonmonotonicity: the conventional competition-fragility view may be challenged at high interest rates. These rates may however be too high to be compatible with oligopolistic equilibrium conditions. The challenging competition-stability view has been argued in terms of a representative borrower managing the profitability-safeness trade-off under moral hazard. However, the representative borrower assumption is not innocuous, playing down by construction the margin effect. The paper considers the adverse selection situation where that trade-off is managed by banks facing heterogeneous borrowers, and shows analytically, in the case of a trapezoidal distribution of idiosyncratic and systemic risk factors, that the conventional view is always valid.info:eu-repo/semantics/publishedVersio