nep-ind New Economics Papers
on Industrial Organization
Issue of 2006‒11‒04
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Cournot Competition By Andrew F. Daughety
  2. Outsourcing Induced by Strategic Competition By Yutian Chen; Pradeep Dubey; Debapriya Sen
  3. An overview of Stackelberg pricing in networks By Hoesel Stan van

  1. By: Andrew F. Daughety (Department of Economics and Law School, Vanderbilt University)
    Abstract: Cournot's 1838 model of strategic interaction between competing firms has become the primary workhorse for the analysis of imperfect competition, and shows up in a variety of fields, notably industrial organization and international trade. This entry begins with a tour of the basic Cournot model and its properties, touching on existence, uniqueness, stability, and efficiency; this discussion especially emphasizes considerations involved in using the Cournot model in multi-stage applications. A discussion of recent applications is provided as well as the URL for an extended bibliography of approximately 125 selected publications from 2001 through 2005.
    Keywords: Cournot models, Cournot equilibrium, oligopoly, multi-stage models of competition, best-response functions.
    JEL: D43
    Date: 2006–10
    URL: http://d.repec.org/n?u=RePEc:van:wpaper:0620&r=ind
  2. By: Yutian Chen (Dept. of Economics, SUNY-Stony Brook); Pradeep Dubey (Dept. of Economics, SUNY-Stony Brook); Debapriya Sen (Dept. of Economics, SUNY-Stony Brook)
    Abstract: We show that intermediate goods can be sourced to firms on the "outside" (that do not compete in the final product market), even when there are no economies of scale or cost advantages for these firms. What drives the phenomenon is that "inside" firms, by accepting such orders, incur the disadvantage of becoming Stackelberg followers in the ensuing competition to sell the final product. Thus they have incentive to quote high provider prices to ward off future competitors, driving the latter to source outside.
    Keywords: Intermediate goods, Outsourcing, Cournot duopoly, Stackelberg duopoly
    JEL: D41 L11 L13
    Date: 2006–11
    URL: http://d.repec.org/n?u=RePEc:cwl:cwldpp:1589&r=ind
  3. By: Hoesel Stan van (METEOR)
    Abstract: The Stackelberg pricing problem has two levels of decision making: tariff setting by an operator, and then selection of the cheapest alternative by customers. In the network version, an operator determines tariffs on a subset of the arcs that he owns. Customers, who wish to connect two vertices with a path of a certain capacity, select the cheapest path. The revenue for the operator is determined by the tariff and the amount of usage of his arcs. The most natural model for the problem is a (bilinear) bilevel program, where the upper level problem is the pricing problem of the operator, and the lower level problem is a shortest path problem for each of the customers. This paper contains a compilation of theoretical and algorithmic results on the network Stackelberg pricing problem. The description of the theory and algorithms is generally informal and intuitive. We redefine the underlying network of the problem, to obtain a compact representation. Then we describe a basic branch-and-bound enumeration procedure. Both concepts are used for complexity issues and for the development of algorithms: establishing NP-hardness, approximability, special cases solvable in polynomial time, and an efficient exact branch-and-bound algorithm.
    Keywords: Economics ;
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:dgr:umamet:2006042&r=ind

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