This paper analyzes the problem of altering the cost structure within an oligopoly, in the presence of costs of manipulation. Oligopolistic firms (which differ from each other in production costs) compete a la Cournot in the second stage, taking as given firm-specific taxes or input prices. In...

In an oligopoly supergame, firms face an obvious technological constraint: the positivity of their production quantities. WE show that Lambson's (1987) result on "security-level punishment", that the single-period punishment makes the firm's discounted participation condition just bind, holds...

This paper analyzes a class of two-stage Cournot games where firms are collusive in the first stage, and shows that oligopolists may have a strong incentive to redistribute resources (such as capital, pollution permits, etc) within the industry as a means of coordinating their output decision.

We analyse optimal penal codes in both Bertrand and Cournot supergames with product differentiation. We prove that the relationship between optimal punishments and the security level (individually rational discounted profit stream) depends critically on the degree of supermodularity in the stage...

The capacity investment by a new firm into an established market is explored in a repeated price game. If the entrant expects collusion to prevail upon entry, it may not practice "judo economics" but instead choose to install enough capacity to serve the entire market. This occurs when collusion...

This paper analyses the situation of an incumbent monopoly who has both to signal that her costs are low in order to dissuade entry tomorrow, and that her product has a high quality in order to attract consumers in the current period. The incumbent can use both price and advertising as signals....

This paper constructs two feasible strategic market games associated to an economy with infinite-dimensional trade space, finitely many traders, and finitely many firms, such that the set of outcomes induced by pure Nash equilibria coincides with the set of competitive equilibria. In both games,...

We present a fairly simple, feasible, price-quantity strategic market game for pure-exchange economies with finitely many agents, such that the set of pure Nash equilibrium outcomes coincides with the set of competitive equilibria. Our set-up encompasses incomplete, non-convex, non-transitive,...

In economic two players games with negative (positive) spillovers it is well-known that symmetric agents both overact (underact) at the Nash Equilibria. We show that for heterogeneous agents this rule has to be amended if the game features strategic substituability.

We show in a differential game of a differentiated product doupoly model of price competition with costly production adjustment that when firms are symmetric the leadership attempt by each firm turns into Stackelberg price warfare yielding a (MArkov perfect) steady state outcome more competitive...