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on Industrial Organization |
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Issue of 2010‒04‒24
three papers chosen by |
| By: | Andrew Ledvina; Ronnie Sircar |
| Abstract: | We study continuous time Bertrand oligopolies in which a small number of firms producing similar goods compete with one another by setting prices. We first analyze a static version of this game in order to better understand the strategies played in the dynamic setting. Within the static game, we characterize the Nash equilibrium when there are $N$ players with heterogeneous costs. In the dynamic game with uncertain market demand, firms of different sizes have different lifetime capacities which deplete over time according to the market demand for their good. We setup the nonzero-sum stochastic differential game and its associated system of HJB partial differential equations in the case of linear demand functions. We characterize certain qualitative features of the game using an asymptotic approximation in the limit of small competition. The equilibrium of the game is further studied using numerical solutions. We find that consumers benefit the most when a market is structured with many firms of the same relative size producing highly substitutable goods. However, a large degree of substitutability does not always lead to large drops in price, for example when two firms have a large difference in their size. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1004.1726&r=ind |
| By: | Manel Antelo (Universidad de Santiago de Compostela) |
| Abstract: | A patent holder owning a two-period lasting innovation is unable to push it into the market, so it is licensed to a downstream user with production capabilities to market it. The production cost of this firm can be low or high, but the patent holder has only a prior on this fact |
| Keywords: | Licensing, asymmetric information, screening, signaling |
| JEL: | D82 L12 L13 L14 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2010_05&r=ind |
| By: | Kenji Fujiwara; Ngo Van Long |
| Abstract: | Does a country strictly gain if it acts as a leader in a resource market under bilateral monopoly? Using differential games, we show that the answer is "yes" when leadership can be exercised globally (global Stackelberg leadership), but possibly "no" when it is exercised only at each stage (stagewise Stackelberg leadership). On the other hand, world welfare under Nash equilibrium is strictly higher than under global Stackelberg equilibrium. Regardless of which country is the leader, world welfare under stagewise Stackelberg leadership is higher than under global Stackelberg leadership. <P>Quand un pays est un leader dans un marché d’une ressource non-renouvelable, est-ce que son niveau de bien-être devient plus élevé? On montre que la réponse est affirmative quand il s’agit d’un leadership global, mais elle peut être négative dans le cas d’un leadership par étapes. Par contre, le niveau de bien-être mondial sous l’équilibre de Nash est supérieur à celui qui est le résultat de l’équilibre global de Stackelberg. Du point de vue du bien-être mondial, l’équilibre de Stackelberg par étapes est meilleur que l’équilibre global de Stackelberg. |
| Keywords: | dynamic game, exhaustible resource, Stackelberg leadership. , jeu dynamique, ressources non-renouvelables, leadership de Stackelberg. |
| JEL: | C73 Q34 F18 |
| Date: | 2010–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2010s-16&r=ind |