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on Game Theory |
| By: | Rene (J.R.) van den Brink (VU University, Amsterdam); Rene Levinsky (Economics Institute, Praha); Miroslav Zeleny (Charles University, Praha) |
| Abstract: | Moulin (1987) studies the equal and proportional sharing rule for a special class of cooperative games that he calls joint venture games. Proportionality is an important principle in allocation problems. Besides some special cases, it is not obvious how proportionality should be applied in cooperative TU-games. Such special cases, where proportionality is obvious, are inessential games and cooperative joint venture games. In this paper, we discuss an explicit axiom that shows that proper Shapley values can be seen as an appropriate way to express proportionality in value allocation in cooperative TU-games. We characterize positive proper Shapley values by affine invariance and an axiom that requires proportional allocation according to the individual singleton worths in generalized joint venture games. As a counterpart, we show that affine invariance and an axiom that requires equal allocation of the surplus in generalized joint venture games, characterize the positive part of the Shapley value among the single-valued solutions. |
| Keywords: | Equity principle; Cooperative venture game; Shapley value; proper Shapley value |
| JEL: | C71 |
| Date: | 2018–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180089&r=gth |
| By: | Bergemann, Dirk; Brooks, Benjamin A; Morris, Stephen |
| Abstract: | We characterize revenue maximizing mechanisms in a common value environment where the value of the object is equal to the highest of bidders' independent signals. The optimal mechanism exhibits either neutral selection, wherein the object is randomly allocated at a price that all bidders are willing to pay, or advantageous selection, wherein the object is allocated with higher probability to bidders with lower signals. If neutral selection is optimal, then the object is sold with probability one by a deterministic posted price. If advantageous selection is optimal, the object is sold with probability less than one at a random price. By contrast, standard auctions that allocate to the bidder with the highest signal (e.g., the first-price, second-price or English auctions) deliver lower revenue because of the adverse selection generated by the allocation rule: if a bidder wins the good, then he revises his expectation of its value downward. We further show that the posted price mechanism is optimal among those mechanisms that always allocate the good. A sufficient condition for the posted price to be optimal among all mechanisms is that there is at least one potential bidder who is omitted from the auction. Our qualitative results extend to more general common value environments where adverse selection is high. |
| Keywords: | advantageous selection; Adverse Selection; common values; maximum game; neutral selection; Optimal auction; posted price; revenue equivalence |
| JEL: | C72 D44 D82 D83 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13332&r=gth |
| By: | Salamanca, Andrés (Department of Business and Economics) |
| Abstract: | In this paper we explore the relationship between several value-like solution concepts for cooperative games with incomplete information and utility transfers in the form of sidepayments. In our model, state-contingent contracts are required to be incentive compatible, and thus utility might not be not fully transferable (as it would be in the complete information case). When we restrict our attention to games with orthogonal coalitions (i.e., which do not involve strategic externalities), our first main result states that Myerson’s [Cooperative games with incomplete information. Int. J. Game Theory. (1984), 13, 69-96] generalization of the Shapley NTU value and Salamanca’s [A generalization of the Harsanyi NTU value to games with incomplete information. (2016), HAL 01579898] extension of the Harsanyi NTU value are interim utility equivalent. If we allow for arbitrary informational and strategic externalities, our second main result establishes that the ex-ante evaluation of Myerson’s solution equals Kalai and Kalai’s [Cooperation in strategic games revisited. Q. J. Econ. (2013) 128, 917-966] cooperative-competitive value in two-player games with verifiable types. |
| Keywords: | Cooperative games; incomplete information; sidepayments |
| JEL: | C71 C78 D82 |
| Date: | 2018–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2018_006&r=gth |
| By: | Salamanca, Andrés (Department of Business and Economics) |
| Abstract: | In this paper, we introduce a solution concept generalizing the Harsanyi non-transferable utility (NTU) value to cooperative games with incomplete information. The so-defined S-solution is characterized by virtual utility scales that extend the Harsanyi-Shapley fictitious weighted utility transfer procedure. We construct a three-player cooperative game in which Myerson’s [Cooperative games with incomplete information. Int. J. Game Theory, 13, 1984, pp. 69-96] generalization of the Shapley NTU value does not capture some “negative” externality generated by the adverse selection. However, when we explicitly compute the S-solution in this game, it turns out that it prescribes a more intuitive outcome which takes into account the above mentioned informational externality. |
| Keywords: | Cooperative games; incomplete information; virtual utility |
| JEL: | C71 C78 D82 |
| Date: | 2018–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2018_005&r=gth |
| By: | Radványi, Anna |
| Abstract: | In this paper sharing the cost of emission in supply chains are considered. We focus on allocation problems that can be described by rooted trees, called cost-tree problems, and on the induced transferable utility cooperative games, called upstream responsibility games (Gopalakrishnan et al., 2017). The formal notion of upstream responsibility games is introduced, and the characterization of the class of these games is provided. The Shapley value (Shapley, 1953) is probably the most popular value for transferable utility cooperative games. Dubey (1982) and Moulin and Shenker (1992) show respectively, that Shapley (1953)’s and Young (1985)’s axiomatizations of the Shapley value are valid on the class of airport games. We extend Dubey's and Moulin and Shenker's results onto the class of upstream responsibility games, that is, we provide two characterizations of the Shapley value for upstream responsibility games. |
| Keywords: | upstream responsibility games, cost sharing, emission, supply chain, shapley value, rooted tree, axiomatization of the shapley value |
| JEL: | C71 |
| Date: | 2018–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2018/06&r=gth |
| By: | Salamanca, Andrés (Department of Business and Economics) |
| Abstract: | Several value-like solution concepts are computed and compared in a cooperative game with incomplete information and non-transferable utility. |
| Keywords: | Cooperative games; incomplete information; non-transferable utility |
| JEL: | C71 C78 D82 |
| Date: | 2018–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2018_007&r=gth |
| By: | Richard Cornes (Research School of Economics, Australian National University); Luciana C. Fiorini (Business School, The University of Western Australia); Wilfredo L. Maldonado (Graduate School of Economics, Catholic University of Brasilia) |
| Abstract: | Using the replacement function associated with aggregative games, we analyze the expectational dynamics of the aggregate strategy of the game. We can interpret the Nash equilibrium of the game as the rational expectations equilibrium (REE) of the system, and we examine the expectational stability of the REE. We characterize local stability in terms of fundamentals and the REE itself. We illustrate the results through well-known aggregative games (Cournot games, Bertrand competition with differentiated goods, rent seeking games, and the public goods provision game) and analyze their global expectational dynamics. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:17-06&r=gth |
| By: | Pietro Guarnieri; Tommaso Luzzati |
| Abstract: | The "battle of the sexes" game is usually taken as an example to illustrate the difficulties of coordination. Two of its hypotheses, however, are unrealistic and not necessary to the story it tells. We refer to the assumptions that (1) "to go separately to the disliked event" gives the same payoff as "to go separately to the favourite event" and that (2) only two options are available to the partners. Relaxing those hypotheses leaves intact the original message of the BoS, while increases its narrative scope. According to the importance attributed by the agents to "to go out together", the modified BoS can predict more outcomes than the original one. For instance, both "to go out separately", and "to play together compromise options" become possible equilibria. After a short survey of how the battle of the sexes is used in game-theory textbooks, we show the consequences of the proposed variations, firstly in a discrete and then in a continuous setting. An application to the recent Italian politics is attempted. |
| Keywords: | coordination, compromise solutions, conflict resolution, political alliances |
| JEL: | A20 C72 D74 |
| Date: | 2018–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2018/239&r=gth |
| By: | Hsieh, Chih-Sheng (Chinese University of Hong Kong); König, Michael D. (Vrije Universiteit Amsterdam); Liu, Xiaodong (University of Colorado, Boulder); Zimmermann, Christian (Federal Reserve Bank of St. Louis) |
| Abstract: | We study the impact of research collaborations in coauthorship networks on research output and how optimal funding can maximize it. Through the links in the collaboration network, researchers create spillovers not only to their direct coauthors but also to researchers indirectly linked to them. We characterize the equilibrium when agents collaborate in multiple and possibly overlapping projects. We bring our model to the data by analyzing the coauthorship network of economists registered in the RePEc Author Service. We rank the authors and research institutions according to their contribution to the aggregate research output and thus provide a novel ranking measure that explicitly takes into account the spillover effect generated in the coauthorship network. Moreover, we analyze funding instruments for individual researchers as well as research institutions and compare them with the economics funding program of the National Science Foundation. Our results indicate that, because current funding schemes do not take into account the availability of coauthorship network data, they are ill-designed to take advantage of the spillover effects generated in scientific knowledge production networks. |
| Keywords: | coauthor networks, scientific collaboration, spillovers, key player, research funding, economics of science |
| JEL: | C72 D85 D43 L14 Z13 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11916&r=gth |
| By: | Kunimoto, Takashi (School of Economics, Singapore Management University); Zhang, Cuiling (School of Economics, Singapore Management University) |
| Abstract: | This paper characterizes mechanisms satisfying Bayesian incentive compatibility (BIC) and interim individual rationality (IIR) in the classical public good provision problem. Many papers in the literature obtain the results in the so-called standard model of ex ante identical agents with a continuous, closed interval of types. Although the standard model and more generally a continuum type space are widely used in the literature, it is nonetheless an abstraction of reality. Given that the public good provision problem has occupied a central application in the theory of mechanism design, we propose a "stress test" for the results in the standard model by subjecting them to a fi nite discretization over the standard model. The main contribution of this paper is that many of the known results gained within the standard continuum type space also hold when it is replaced by a discrete type space. |
| Keywords: | Budget balance; decision efficiency; incentive compatibility; individual rationality; mechanisms; public goods |
| JEL: | C72 D78 D82 |
| Date: | 2018–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2018_021&r=gth |
| By: | Elena M. Parilina; Alessandro Tampieri |
| Abstract: | This paper analyses a prisoners'dilemma where players' discount factor is private information. We consider an infinitely repeated game where two states of the world may occur. According to her own discount factor, a player chooses a cooperative behaviour in both states (patient), in none of the states (impatient) or in one state only (mildly patient). The presence of different states of the world affects the strategic role of beliefs. A mildly patient player has an incentive in pretending to be patient, which increases with the competitor's belief that the player is patient. nterestingly, this effect prevents or delays cooperative equilibria to occur when the belief in patience is strong. |
| Keywords: | Bayesian games; two-phases game; Markov perfect equilibrium |
| JEL: | C73 D43 L13 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2018_21.rdf&r=gth |
| By: | Hubert Janos Kiss (Momentum (LD-004/2010) Game Theory Research Group Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Department of Economics, Eötvös Loránd University, Budapest, Hungary); Ismael Rodriguez-Lara (Departamento de Teoría e Historia Económica Universidad de Granada); Alfonso Rosa-Garcia (Facultad de Ciencias Jurídicas y de la Empresa, Universidad Católica San Antonio, Murcia, Spain) |
| Abstract: | We study how lines form endogenously in front of banks when depositors differ in their liquidity needs. Our model has two stages. In the first one, depositors choose the level of costly effort they want to exert to arrive early at the bank which determines the order of decisions. In the second stage, depositors decide whether to withdraw or to keep the funds deposited. We consider two different informational environments (simultaneous and sequential) that differ in whether or not depositors can observe the decision of others during the second stage of the game. We show theoretically that the informational environment affects the emergence of bank runs and thus should influence the willingness to rush to the bank. We test the predictions in the lab, where we gather extensive data on individual traits to account for depositors' heterogeneity; e.g. socio-demographics, uncertainty attitudes or personality traits. We find no significant differences in the costly effort to arrive early at the bank neither across the informational environments, nor according to the liquidity needs of the depositors. In the sequential environment, some depositors rush to the bank because they are irrational and do not recognize the benefits of observability in fostering the coordination on the no-bank run outcome. There is also evidence that some depositors rush to keep their funds deposited and to facilitate coordination on the efficient outcome. Finally, we document that loss aversion is an important factor in the formation of the line. |
| Keywords: | bank runs, coordination problems, endogenous formation of lines, loss aversion, risk aversion, experimental economics, game theory, sequential games, simultaneous games |
| JEL: | C91 D03 D8 G02 J16 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1826&r=gth |
| By: | Mariotti, Thomas; Schweizer, Nikolaus; Szech, Nora; von Wangenheim, Jonas |
| Abstract: | A present-biased consumer has to make sequential consumption decisions under no commitment. Consumption is enjoyable in the short term but potentially harmful in the long term. The likelihood of harmful future consequences hinges on the consumer's type. While the distribution of types is common knowledge, the consumer's individual type is initially unknown. We study information design in this setting, varying how much a consumer learns about his type via an information nudge. We first consider a mechanism designer who is benevolent in the sense that his interests are aligned with the consumer's. We find that there always exists an optimal incentive-compatible persuasion mechanism that is of cutoff type, either recommending consumption or abstinence, and we provide a full characterization of this information nudge for an arbitrary distribution of types. Under a stronger bias for the present, the target group of the nudge who receives a credible signal to abstain must be tightened. We compare this information nudge with the optimal information structure if expected consumption should be minimized, and if it should be maximized. The first may be the goal of a health authority, whereas the latter may be preferred by a lobbyist. |
| Keywords: | Information Design; Information Nudge; Present-Biased Preferences; SelfControl |
| JEL: | C73 D82 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:33041&r=gth |
| By: | Sarfati, Mahir (Research Institute of Industrial Economics (IFN)); Hesamzadeh, Mohammad Reza (Royal Institute of Technology (KTH)); Holmberg, Pär (Research Institute of Industrial Economics (IFN)) |
| Abstract: | In part I of this paper, we proposed a Mixed-Integer Linear Program (MILP) to analyze imperfect competition of oligopoly producers in two-stage zonal power markets. In part II of this paper, we propose a solution algorithm which decomposes the proposed MILP model into several subproblems and solve them in parallel and iteratively. Our solution algorithm reduces the solution time of the MILP model and it allows us to analyze largescale examples. To tackle the multiple Subgame Perfect Nash Equilibria (SPNE) situation, we propose a SPNE-band approach. The SPNE band is split into several subintervals and the proposed solution algorithm finds a representative SPNE in each subinterval. Each subinterval is independent from each other, so this structure enables us to use parallel computing. We also design a pre-feasibility test to identify the subintervals without SPNE. Our proposed solution algorithm and our SPNE-band approach are demonstrated on the 6-node and the modified IEEE 30-node example systems. The computational tractability of our solution algorithm is illustrated for the IEEE 118-node and 300-node systems. |
| Keywords: | Modied Benders decomposition; Multiple Subgame Perfect Nash equilibria; Parallel computing; Wholesale electricity market; Zonal pricing |
| JEL: | C61 C63 C72 D43 L13 L94 |
| Date: | 2018–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1254&r=gth |
| By: | Gebrehiwot, D.; Holden, S.T. |
| Abstract: | We investigate the extent of variation in output sharing in land rental contracts and alternative hypotheses to explain this variation. Close to half of the rental contracts in our study in northern Ethiopia have output shares that deviate from the dominant 50-50 equal sharing. Variation in land quality, the relative bargaining power of landlords and tenants, production risks and shocks are hypothesized to influence output shares. Matched data of landlords and tenants are used. The importance of endogenous matching of landlords and tenants is investigated by assessing how endogenous tenant characteristics are correlated with landlord characteristics. We find evidence of negative assortative matching for key resource characteristics. A control function approach is used to control for endogenous matching in the output share models. The results reveal that production risks as well as relative bargaining power affect output shares in the reverse tenancy setting with tenants being relatively wealthier and influential than landlords. Acknowledgement : |
| Keywords: | Land Economics/Use |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277362&r=gth |
| By: | Sarfati, Mahir (Research Institute of Industrial Economics (IFN)); Hesamzadeh, Mohammad Reza (Royal Institute of Technology (KTH)); Holmberg, Pär (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper is part I of a two-part paper. It proposes a two-stage game to analyze imperfect competition of producers in zonal power markets with a day-ahead and a real-time market. We consider strategic producers in both markets. They need to take both markets into account when deciding what to bid in each market. The demand shocks between these markets are modeled by several scenarios. The two-stage game is formulated as a Twostage Stochastic Equilibrium Problem with Equilibrium Constraints (TS-EPEC). Then it is further reformulated as a two-stage stochastic Mixed-Integer Linear Program (MILP). The solution of this MILP gives the Subgame Perfect Nash Equilibrium (SPNE). To tackle multiple SPNE, we design a procedure which finds all SPNE with different total dispatch costs. The proposed MILP model is solved using Benders decomposition embedded in the CPLEX solver. The proposed MILP model is demonstrated on the 6-node and the IEEE 30-node example systems. |
| Keywords: | Two-stage game; Zonal pricing; Two-stage equilibrium problem with equilibrium constraints; Wholesale electricity market |
| JEL: | C61 C63 C72 D43 L13 L94 |
| Date: | 2018–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1253&r=gth |
| By: | Sigit PERDANA (Business School, The University of Western Australia); Rod TYERS (Business School, The University of Western Australia and Research School of Economics, Centre for Applied Macroeconomic Analysis (CAMA), Australian National University) |
| Abstract: | Global agreement to reduce carbon emissions has been weakened by slowing growth and burden sharing conflicts. This paper examines strategic interaction amongst regions by simplifying the policy choice to that between carbon taxation and free riding. Benefits from climate change mitigation are constructed via a meta-analysis of existing studies that link carbon concentration with average surface temperature and measures of economic welfare. Implementation costs are then derived by modeling national and global economic performance. Multiplayer, normal form games with payoffs derived by netting costs from shared benefits are then constructed, revealing that the US economy is a net gainer in net present value terms from unilateral implementation. The comparative net benefits to Europe and China are negative but small, making their choice sensitive to the discount rate. The dominant strategy for all other countries is to free ride. Taking the three large economies as a group, there are net gains from implementing carbon taxes, which would be bolstered by universal adoption. Yet compensatory side payments that would induce universal adoption are still not affordable. Moreover, the net gains to all regions do not begin to appear for at least two decades, rendering commitment to abatement politically difficult. |
| Keywords: | climate change, carbon taxation, global dynamic general equilibrium analysis |
| JEL: | F47 Q34 Q54 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:17-09&r=gth |
| By: | Donna, Javier; Espin-Sanchez, Jose |
| Abstract: | We use data on sequential water auctions to estimate demand when units are complements or substitutes. A sequential English auction model determines the estimating structural equations. When units are complements, one bidder wins all units by paying a high price for the first unit, thus deterring others from bidding on subsequent units. When units are substitutes, different bidders win the units with positive probability, paying prices similar in magnitude. We recover individual demand consistent with this stark pattern of outcomes and confirm it is not collusive but consistent with noncooperative behavior. Demand estimates are biased if one ignores these features. |
| Keywords: | Auctions, Structural Demand Estimation, Market Structure, Competition, Collusion |
| JEL: | C13 D44 L10 L40 |
| Date: | 2018–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:90052&r=gth |
| By: | Guidon Fenig; Giovanni Gallipoli; Yoram Halevy |
| Abstract: | This paper develops an experimental methodology that allows the identification of decision-making processes in interactive settings using tracking of non-choice data. This non-intrusive and indirect approach provides essential information for the characterization of beliefs. The analysis reveals significant heterogeneity, which is reduced to two broad types, differentiated by the importance of pecuniary rewards in agents' payoff function. Most subjects maximize monetary rewards by best responding to beliefs shaped by recent history. Others are able to identify profit-maximizing actions but choose to systematically deviate from them. The interaction among different types is key to understanding aggregate outcomes. |
| Keywords: | non-choice data, typology, tracking, response-time, coordination, public goods, complementarity, altruism, joy of giving, competitiveness, joy of winning, laboratory experiment. |
| JEL: | C9 C92 C72 D9 H41 |
| Date: | 2018–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-625&r=gth |
| By: | Edouard Civel; Marc Baudry |
| Abstract: | We develop a game where heterogeneous agents have the option of adopting an invention of uncertain quality or postponing their decision to benefit from others' experience through Bayesian learning. Messages produced on the invention nature are noisy, representing the "teething troubles" of innovation. Our model gives microeconomic foundations to the S-shaped innovation diffusion curves, informational externality inducing strategic delay in agents' behavior. Moreover, noise could nip in the bud the diffusion of inventions: numerical simulations underline a bi-modal distribution of steady states for innovation diffusion, stillborn or fully developed, bringing to light a reputational valley of death for inventions. |
| Keywords: | Innovation diffusion ; Invention adoption ; Information ; Strategic options ; Bayesian learning. |
| JEL: | O33 L15 D83 C73 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2018-47&r=gth |
| By: | Ori Haimanko (BGU) |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:1813&r=gth |
| By: | Bouma, J.A. (Tilburg University, Center For Economic Research); Nguyen, Binh (Tilburg University, Center For Economic Research); van der Heijden, Eline (Tilburg University, Center For Economic Research); Dijk, J.J. |
| Abstract: | This paper presents the results of a threshold public goods game experiment with heterogeneous players. The experiment is designed in close collaboration with the Dutch association of agri-environmental farmer collectives. Subjects are recruited at a university (“the lab”) and a farm management training centre (“lab-in-the-field”). The treatments have two different distribution rules which are varied in a within-subjects manner. After subjects have experienced both, they can vote for one of the two rules: either a differentiated bonus that results in equal payoff for all, or an undifferentiated, equal share of the group bonus. In a between-subjects manner, subjects can vote for a (minimum or average) threshold or are faced with an exogenous threshold. The results indicate that exogenous thresholds perform better, possibly because the focal point they provide facilitates coordination. With regard to the two distribution rules, the results are mixed: average contributions and payoffs are higher in the lab under the ‘equal-payoff’ rule, but there is no significant difference between the two in the lab-in-the-field, possibly because contributions in the lab-in-the-field are much less efficient. Overall, our results suggest that environmental payment schemes should not only consider farmer heterogeneity in the design of group contracts, but pay explicit attention to coordination problems as well. |
| Keywords: | Threshold public good games; endogenous choice; lab-in-the-field; collective agri-envorenmental management; group contracts; distribution rules; heterogeneous subjects |
| JEL: | H41 C92 C93 D70 Q57 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:34e2dea1-dc21-4a44-b43f-28baf574c98c&r=gth |
| By: | Anicet Kabre |
| Abstract: | In this note, we introduce pollution and examine its effects in a finite bilateral oligopoly model where agents have asymmetric Cobb-Douglas preferences. We define two strategic equilibria: the Stackelberg-Cournot equilibrium with pollution (SCEP) and the Cournot equilibrium with pollution (CEP). While the supplied quantities of the polluting and the non-polluting good depend on the preferences of all economic agents in the case of symmetric preferences, we show that when preferences are asymmetric, i) at both equilibria, each polluter’s equilibrium supply depends only on the non-polluters’ preferences for the non-polluting good; ii) at the CEP and the SCEP, the elasticity of the polluters emissions is greater when nonpolluters preferences for the non-polluting good increase, compared to an increase in their own preferences for this good; iii) firm’s emissions’elasticity decreases with the market power if their marginal cost is lower than their competitor. |
| Keywords: | Bilateral oligopoly; Pollution; Cobb-Douglas preferences |
| JEL: | D43 D51 Q52 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2018-48&r=gth |
| By: | Sigaux, Jean-David |
| Abstract: | I develop and test a model explaining the gradual price decrease observed in the days leading up to anticipated asset sales such as Treasury auctions. In the model, risk-averse investors expect an uncertain increase in the net supply of a risky asset. They face a trade-off between hedging the supply uncertainty with long positions, and speculating with short positions. As a result of hedging, the equilibrium price is above the expected price. As the supply shock approaches, uncertainty decreases due to the arrival of information, investors hedge less and speculate more, and the price decreases. In line with these predictions, meetings between the Treasury and primary dealers, as well as auction announcements, explain a 2.4 bps yield increase in Italian Treasuries. JEL Classification: G11, G12, E43 |
| Keywords: | anticipated supply shocks, market making, supply risks, Treasury auctions |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20182208&r=gth |
| By: | Andrea Greppi; Domenico Menicucci |
| Abstract: | A multiproduct dominant firm faces the threat of entry from another multiproduct firm or from single-product firms. We inquire whether the possibility of bundling by the dominant firm is more effective in deterring entry in one setting or the other. We extend the analysis of a model in Hurkens et al. (2018) to explore how the dominance level affects the comparison. For instance, for intermediate dominance levels an integrated firm is more vulnerable to bundling than separate firms, but bundling is a credible action for the dominant firm more often when it faces separate rivals than an integrated rival. |
| Keywords: | Competitive Bundling, Entry deterrence. |
| JEL: | D43 L13 L41 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2018_26.rdf&r=gth |