This paper analyses the impact of competition among downstream firms on a supplier's investment and on her incentive to vertically integrate. We argue that tougher competition decreases the downstream industry profit, but improved the supplier's negotiation position. In particular, the supplier...

Many recent stochastic dynamic models in economics and finance are based on the theory of Brownian motion and its control or regulation. A heuristic exposition of this theory is presented with emphasis given to Itô's Lemma, the calculation of expected values and the derivation of Smooth Pasting...

The paper analyses a simple Rubinstein-type bargaining model in which there is no discounting and the cake decays over time at a positive rate. As a consequence, outside options enter players' unique Perfect Equilibrium payoffs. It is then shown that these payoffs, when the interval between two...

Savage motivated his Sure-Thing Principle b y arguing that, whenever an act would be preferred if an event obtains and preferred if an event did not obtain, then it should be preferred overall. The idea that it should be possible to decompose and recompose decision problems in this way has...

The Wong-Viner Envelope Theorem on the equality of long-run and short-run marginalcosts (LRMC and SRMC) is reformulated for convex but generally nondifferentiable costfunctions. The marginal cost can be formalized as the multi-valued subdifferential a.k.a.the subgradient set but, in itself, this...