Showing 1 - 10 of 22
This paper shows that the profitability of merger in oligopoly is significantly enhanced if firms delegate the output decision to an agent and then motivate the latter using strategic rent shifting contrcts. Two consequences of increased profitability are that the minimum market share that the...
Persistent link: https://www.econbiz.de/10005775651
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...
Persistent link: https://www.econbiz.de/10005672004
Under Cournot and Bertrand cases, cartel stability is investigated in a context of adverse selection, where consumers are imperfectly informed about the products quality. Producers' collusion may be necessary to signal quality via a third-party certification or a price. In particular, cases with...
Persistent link: https://www.econbiz.de/10005618896
Two rival firms must decide when to invest in R&D and whether the new products should be compatible. I show that network externalities may induce the firms to advance their introduction of new incompatible technologies.
Persistent link: https://www.econbiz.de/10005672009
In an oligopoly, prior to choosing quantities/prices, each firm has an opportunity to form pair-wise collaborative links with other firms. These pair-wise links defines a collaboration network. We study stable and efficient networks under different types of market competition. We find that...
Persistent link: https://www.econbiz.de/10005474874
It has been shown that if buyers have zero search cost and the remainder a common positive search cost, and sellers post prices, then there is a unique symmetric Nash equilibrium-sellers choose a price distribution. We show that increasing the number of search cost types results in another...
Persistent link: https://www.econbiz.de/10005587793
In this paper we have developed a model which analyzes price competition in the deregulated Spanish electricity market. This model is the first to take explicitly into account the mechanism designed in the recent Spanish Electricity Law for settling stranded costs payments.
Persistent link: https://www.econbiz.de/10005776169
Recovery of stranded costs is perhaps the most litigious issue encountering regulators in promoting competition in United States and European utility industries. We build a dynamic model of Cournot competition which takes into account a particular regulatory mechanism regularly employed in...
Persistent link: https://www.econbiz.de/10005776172
This note illustrates the fact that the number of active firms in free entry equilibrium may be largely indeterminate and different levels of positive profits may in many cases be sustained. This is shown to be true, in spite of market contestability, either under Cournot competition or under...
Persistent link: https://www.econbiz.de/10005779607
Conjectural variation models are popular in empirical research as they infer the degree of market power from real data. IO-theorists, however, disapprove it for lack of theoretical foundation, arguing that dynamic reactions are forced into a static model with the strategy space and time horizon...
Persistent link: https://www.econbiz.de/10005781021