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Admati and Perry (1987) derive the equilibrium in a bargaining game between a seller and buyer when the buyer's valuation is private information. They show that, for some parameter values, trade occurs at the Rubinstein (1982) prices given the buyer's true valuation (pl if the buyer has a low...
Persistent link: https://www.econbiz.de/10005063605
We develop a parametric model in which a high-quality dominant firm faces a low-quality competitive fringe. We show that in this model, an increase in the dominant firm's product quality increases total welfare and consumer surplus. An increase in fringe firm quality has an ambiguous effect on...
Persistent link: https://www.econbiz.de/10011122733
In this paper we analyze the relationship between the correlation between morality and human capital (“ability”) on the one hand and aggregate economic performance on the other. Morality is defined as an aversion to consuming goods obtained through appropriative rather than productive...
Persistent link: https://www.econbiz.de/10011052855
This paper incorporates morality -- defined as lower utility from consuming goods obtained through appropriative rather than productive activities -- into a simple static general equilibrium model in which agents choose whether to be producers or appropriators. The authors analyze the...
Persistent link: https://www.econbiz.de/10009143483
We consider a high-quality dominant firm facing a low-quality competitive fringe. We show that the dominant firm's quantity is (weakly) increasing in its quality if and only if its marginal cost (weakly) exceeds that of the fringe; otherwise it is strictly decreasing in quality. This result is...
Persistent link: https://www.econbiz.de/10010679069
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We present a technique for locating both an upper and a lower bound on equilibrium points of supermodular games by looking only at the first derivatives of the payoff functions at points of disequilibrium. This technique is useful for characterizing equilibria of games when the closed form...
Persistent link: https://www.econbiz.de/10005371090
Recent literature has shown that an incumbent can use exclusive contracts to maintain supra-competitive prices when buyers of the good are also competitors. Most of the models require the incumbent to completely prevent a more efficient potential entrant from entering, and assume that the...
Persistent link: https://www.econbiz.de/10010730061