The existence of a negative relationship between cartel stability and the level of excess capacity in an industry has for a long time been the dominant view in the traditional IO literature. Recent supergame-theoretic contributions (e.g. Brock and Scheinkman, 1985) appear to show that this view...

This paper presents a model of competition between operators on urban local bus routes in which passengers always board the first bus to arrive, and it is costly to revise timetables. The model predicts that timetables are unstable, the operator whose bus was boarded by fewest passengers is the...

This paper analyses a dynamic game of investment in Ramp;D or advertising, where current investments change future market conditions. It investigates whether underinvestment can be supported in equilibrium by the threat of escalation in investment outlays. When there are no spillovers, or there...

This paper addresses the questions of the effects of diversification strategies on firms' profitability. Empirical analyses do not seem to confirm the hypothesis that diversification is the optimal response to the presence of synergies and hence generates higher profits. It is shown that this...

The conventional view that product heterogeneity limits the scope for collusion among oligolpolists has been challenged in recent theoretical work. This paper provides an argument in support of the conventional view by emphasising the role of uncertainty. I introduce the idea that, with...

When firms have different Ramp;D productivities, it may be welfare increasing to differentiate patent lives across inventions. The reason is that the uniform patent life provides excessive incentives to do Ramp;D to the low productivity firms and insufficient incentives to high productivity...

The paper specifies and estimates a production function for the airline industry, identifying firms' network characteristics and efficiency as the main determinants of their productivity. The application of this analysis to the European market shows that productivity differences among flag...

This paper develops an empirical model of entry to analyze the effect of previous regulation on European airlines? post-liberalization profits. The author distinguishes between European flag carriers, which are hightly regulated at the beginning of the eighties, and independent airlines. It is...

This paper proposes an equilibrium concept for a class of games in which players make irreversible costly decisions; these games have been widely used in the recent I.O. literature. The equilibrium concept is defined, not in the space of strategies, but in the space of (observable outcomes). It...