nep-mic New Economics Papers
on Microeconomics
Issue of 2016‒10‒30
thirteen papers chosen by
Jing-Yuan Chiou
National Taipei University

  1. Bargaining through Approval By Matias Nunez; Jean-François Laslier
  2. Judgement and Ranking: Living with Hidden Bias By Osório, António (António Miguel)
  3. Facilitating collusion by exchanging non-verifiable sales reports By David Spector
  4. Strategic Voting under Committee Approval: A Theory By Jean-François Laslier; Karine Van Der Straeten
  5. Discrete-Space Agglomeration Model with Social Interactions: Multiplicity, Stability, and Continuous Limit of Equilibria By Akamatsu, Takashi; Fujishima, Shota; Takayama, Yuki
  6. Large Multi-Objective Generalized Games: Existence and Essential Stability of Equilibria By Sofía Correa; Juan Pablo Torres-Martínez
  7. Strategic grouping and search for quality journalism, online versus offline By Matthew Ellman; Tomás Rodríguez Barraquer
  8. On the equivalence of buyer and seller proposals within canonical matching and pricing environments By John Kennes; Daniel le Maire
  9. The strategic value of partial vertical integration By Fiocco, Raffaele
  10. A Marginalist Model of Network Formation By Olaizola Ortega, María Norma; Valenciano Llovera, Federico
  11. Contract contingency in vertically related markets By Bacchiega, Emanuele; Bonroy, Olivier; Petrakis, Emmanuel
  12. Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions By Asker, John; Bar-Isaac, Heski
  13. Equilibrium of a production economy with unbounded attainable allocation set By Senda Ounaies; Jean-Marc Bonnisseau; Souhail Chebbi

  1. By: Matias Nunez (Thema, Université de Cergy-Pontoise - THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique); Jean-François Laslier (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics)
    Abstract: The paper considers two-person bargaining under Approval Voting. It first proves the existence of pure strategy equilibria. Then it shows that this bargaining method ensures that both players obtain at least their average and median utility level in equilibrium. Finally it proves that, provided that the players are partially honest, the mechanism triggers sincerity and ensures that no alternative Pareto dominates the outcome of the game.
    Keywords: Two-agents,Approval Voting,Efficiency,Partial Honesty
    Date: 2015–06
  2. By: Osório, António (António Miguel)
    Abstract: The complexity and subjectivity of the judgement task conceals the existence of biases that undermines the quality of the process. This paper presents a weighted aggregation function that attempts to reduce the influence of biased judgements on the final score. We also discuss a set of desirable properties. The proposed weighted aggregation function is able to correct the "nationalism bias" found by Emerson et al. (2009) in the 2000 Olympic Games diving competition and suggest the possibility of a "reputation bias". Our results can be applied to judgement sports and other activities that require the aggregation of several personal evaluations. Keywords: Weighted aggregation function; Judgement by Grading; Nationalism Bias; Reputation Bias; Bias Correction; Olympic Games. JEL classification: D72, D81, D03.
    Keywords: Decisió, Presa de, Microeconomia -- Aspectes psicològics, 33 - Economia,
    Date: 2016
  3. By: David Spector (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics)
    Abstract: A number of collusive agreements involve the exchange of self-reported sales data between firms, which use them to monitor compliance with a target market share allocation. This paper shows that such communication between competitors may facilitate collusion even if all private information becomes public after a delay. The exchange of sales information may allow firms to implement incentive-compatible market share reallocation mechanisms after unexpected swings, limiting the recourse to price wars as a tool for mutual disciplining. In some cases, efficient collusion cannot occur unless firms are able to engage in such communication.
    Keywords: Jeux répétés,Politique de la concurrence,Communication,Collusion
    Date: 2015–02
  4. By: Jean-François Laslier (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Karine Van Der Straeten (Institute for Advanced Study Toulouse - Institute for Advanced Study Toulouse, TSE - Toulouse School of Economics - Toulouse School of Economics)
    Abstract: We propose a theory of strategic voting under “Commitee Approval”: a fixed-sized commitee of M members is to be elected; each voter votes for as many candidates as she wants, and the M candidates with the most votes are elected. We assume that voter preferences are separable and that there exists a tiny probability that any vote might be misrecorded. We show that best responses involve voting by pairwise comparisons. Two candidates play a critical role: the weakest expected winner and the strongest expected loser. Expected winners are approved if and only if they are preferred to the strongest expected loser and expected losers are approved if and only if they are preferred to the weakest expected winner. At equilibrium, if any, a candidate is elected if and only if he is approved by at least half of the voters. With single-peaked preferences, an equilibrium always exists, in which the first M candidates according to the majority tournament relation are elected.
    Keywords: Strategic Voting,Theory
    Date: 2015–06
  5. By: Akamatsu, Takashi; Fujishima, Shota; Takayama, Yuki
    Abstract: This study examines the properties of equilibrium, including the stability, of discrete-space agglomeration models with social interactions. The findings reveal that while the corresponding continuous-space model has a unique equilibrium, the equilibrium in discrete space can be non-unique for any finite degree of discretization by characterizing the discrete-space model as a potential game. Furthermore, it indicates that despite the above result, any sequence of discrete-space models' equilibria converges to the continuous-space model's unique equilibrium as the discretization of space is refined.
    Keywords: Social interaction; Agglomeration; Discrete space; Potential game; Stability; Evolutionary game theory
    JEL: C62 C72 C73 D62 R12
    Date: 2016–10–23
  6. By: Sofía Correa; Juan Pablo Torres-Martínez
    Abstract: We characterize the existence and the essential stability of Weak Pareto-Nash and Pareto-Nash equilibria in multi-objective generalized games with a continuum of players.
    Date: 2016–09
  7. By: Matthew Ellman (IAE-CSIC, BGSE); Tomás Rodríguez Barraquer (MOVE-UAB, BGSE)
    Abstract: This paper investigates how supply-side factors influence the search for quality content in online and offline environments. We show that lower fixed costs of online publishing reduce the incentives to bundle content, as compared to offline journalism. In the presence of asymmetric information over journalistic quality, bundling of content by journalists who publish as a group generates positive informational externalities for users. Journalists group assortatively, better journalists having better partners. Then a consumer who discovers one quality journalist, has found several. The online environment, by reducing the pressure to group up, can lower welfare in our baseline model. We establish conditions for this result and investigate a number of countervailing forces.
    Keywords: Media economics, quality, search, links, matching
    JEL: L13 L82
    Date: 2016–10
  8. By: John Kennes (Department of Economics and Business Economics, Aarhus University, Denmark); Daniel le Maire (Department of Economics, University of Copenhagen, Denmark)
    Abstract: This paper considers equilibrium proposals by either buyers or sellers in the canonical ‘urnball’ matching market. The proposals can either be posted prices announced by buyers; posted prices announced by sellers; or announcements by sellers (or by buyers) to entertain price proposals, as in auctions. We derive the expected revenue equivalence of these different modes of proposing in this canonical trading environment.
    Keywords: Matching, pricing, frictions
    JEL: D44 C78 D83
    Date: 2016–10–25
  9. By: Fiocco, Raffaele
    Abstract: We investigate the strategic incentives for partial vertical integration, namely, partial ownership agreements between manufacturers and retailers, when retailers privately know their costs and engage in differentiated good price competition. The partial misalignment between the profit objectives within a partially integrated manufacturer-retailer hierarchy entails a higher retail price than under full integration. This `information vertical effect' translates into an opposite `competition horizontal effect': the partially integrated hierarchy's commitment to a higher price induces the competitor to increase its price, which strategically relaxes competition. Our analysis provides implications for vertical merger policy and theoretical support for the recently documented empirical evidence on partial vertical acquisitions. Keywords: asymmetric information, partial vertical integration, vertical mergers, vertical restraints. JEL Classification: D82, L13, L42.
    Keywords: Informació -- Aspectes econòmics, Competència econòmica, 33 - Economia,
    Date: 2016
  10. By: Olaizola Ortega, María Norma; Valenciano Llovera, Federico
    Abstract: We develop a network-formation model where the quality of a link depends on the amount invested in it and is determined by a link-formation "technology" , an increasing strictly concave function which is the only exogenous ingredient in the model. The revenue from the investments in links is the information that the nodes receive through the network. Two approaches are considered. First, assuming that the investments in links are made by a planner, the basic question is that of the efficient investments, either relative to a given infrastructure (i.e. a set of feasible links) or in absolute terms. It is proved that efficient networks belong to a special class of weighted nested split graph networks. Second, assuming that links are the result of investments of the node-players involved, there is the question of stability in the underlying network-formation game, be it restricted to a given infrastructure or unrestricted. Necessary and sufficient conditions for stability of the complete and star networks, and nested split graph networks in general, are obtained.
    Keywords: network, formation, efficiency, stability, nested, core, periphery, split, graphs
    JEL: A14 C72 D85
    Date: 2016–08–18
  11. By: Bacchiega, Emanuele; Bonroy, Olivier; Petrakis, Emmanuel
    Abstract: We study the optimal contract choice of an upstream monopolist producing an essential input that may sell to two vertically differentiated downstream firms. The upstream supplier can offer an exclusive contract to one of the firms or non-exclusive contracts to both firms. Each of the latter can be made contingent or not on the breakdown of the negotiations between the upstream supplier and the rival downstream firm. The distribution of bargaining power during the contract terms negotiations is the main driving force of the monopolist's choices. A powerful supplier always opts for an exclusive contract. By contrast, a weaker supplier offers non-exclusive contracts and makes each of them contingent or non-contingent such as to guarantee the most favorable outside option in its negotiations. Our main results hold under an horizontally differentiated downstream market too.
    Keywords: Vertical relationships, exclusive vs. non-exclusive relationships, contract contingency, two-part tariff, product differentiation, International Relations/Trade,
    Date: 2016
  12. By: Asker, John; Bar-Isaac, Heski
    Abstract: We consider vertical contracts where the retail market may involve search frictions. Minimum advertised price restrictions (MAP) act as a restraint on customers' information and so can increase search frictions in the retail sector. Such restraints, thereby, soften retail competition - an impact also generated by resale price maintenance (RPM). However, by accommodating (consumer or retailer) heterogeneity, MAP can allow for higher manufacturer profits than RPM. We show that they can do so through facilitating price discrimination among consumers; encouraging service provision; and facilitating manufacturer collusion. Thus, welfare effects may be positive or negative compared to RPM or to the absence of such restrictions.
    Date: 2016–10
  13. By: Senda Ounaies (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Department of Mathematics - College of Science - University of Tunis El Manar); Jean-Marc Bonnisseau (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Souhail Chebbi (King Saud University - Department of Mathematics - College of Science)
    Abstract: In this paper, we consider a production economy with an unbounded attainable set where the consumers may have non-complete non-transitive preferences. To get the existence of an equilibrium, we provide an asymptotic property on preferences for the attainable consumptions. We show that this condition holds true if the set of attainable allocations is compact or, when preferences are representable by utility functions, if the set of attainable individually rational utility levels is compact. So we extend the previous existence results with unbounded attainable sets in two ways by adding a production sector and considering general preferences.
    Keywords: production economy,unbounded attainable allocations,quasi-equilibrium,non complete non transitive preferences
    Date: 2016–08

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