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. We consider a dynamic game in which firms improve both a new and a rival old technology while learning about the relative …
Persistent link: https://www.econbiz.de/10005504449
where both risky arms are of the same type, we find that learning will be complete in any Markov perfect equilibrium if the …
Persistent link: https://www.econbiz.de/10005662209
We study a game of strategic experimentation with two-armed bandits where the risky arm distributes lump-sum payoffs according to a Poisson process. Its intensity is either high or low, and unknown to the players. We consider Markov perfect equilibria with beliefs as the state variable. As the...
Persistent link: https://www.econbiz.de/10005791631
The theory of monotone comparative statics and supermodular games is presented as the appropriate tool to model complementarities. The approach, which has not yet been fully incorporated into the standard toolbox of researchers, makes the analysis intuitive and simple, helps in deriving new...
Persistent link: https://www.econbiz.de/10005123543
Why are some cities specialized and others diversified? What are the advantages and disadvantages of urban specialization and diversity? To what extent does the structure of cities, and the activities of firms and people in them, change over time? How does the sectoral composition of cities...
Persistent link: https://www.econbiz.de/10005791261
A large portion of innovators do not patent their inventions. This is a relative puzzle since innovators are often perceived to be at the mercy of imitators in the absence of legal protection. In practice, innovators however invest actively in making their products technologically hard to...
Persistent link: https://www.econbiz.de/10011084053
We first estimate a dynamic game for the global automobile industry and then compute a Markov Perfect equilibrium to study the equilibrium relationship between market structure and innovation. The key state variable in the model is the efficiency level of each firm and the market structure is...
Persistent link: https://www.econbiz.de/10011084428
Do contractual frictions matter when firms are engaged in repeated interactions? This paper argues that long-term relationships, which allow firms to (partly) overcome the static costs associated with low contractibility, will under certain circumstances create dynamic inefficiencies. We...
Persistent link: https://www.econbiz.de/10011201353
This Paper examines irreversible investment in a project with uncertain returns, when there is an advantage to being the first to invest, and externalities to investing when others also do so. Pre-emption decreases and may even eliminate the option values created by irreversibility and...
Persistent link: https://www.econbiz.de/10005789033
We study the problem of an inventor who brings to the market an innovation that can be legally copied. Imitators may 'enter' the market by copying the innovation at a cost or by buying from the inventor the knowledge necessary to reproduce and use the invention. The possibility of contracting...
Persistent link: https://www.econbiz.de/10008477187