follower payoffs in symmetric duopoly games this paper compares the leader and follower payoff in a duopoly game as they arise in sequential play with the nash payoff in simultaneous play if the game is symmetric has a unique symmetric nash equilibrium and players payoffs are monotonic in the opponent s choice along their own best reply function then the follower payoff is either higher than the leader payoff or even lower than in the simultaneous game this gap for the possible follower payoff had not been observed in earlier duopoly models of endogenous timing

cournot duopoly with two production periods and cost differentials abstract saloner 1987 analyzes a cournot model with two production periods before the market clears if costs do not vary across periods any point on the outer envelope of the reaction functions between the firms stackelberg outputs is attainable with a subgame perfect nash equilibrium spne saloner s analysis is generalized by allowing for cost differences across periods the continuum of equilibria vanishes for any cost differential if costs fall slightly over time there are multiple leader follower equilibria otherwise the model generates a unique spne where both firms produce their single period cournot outputs in the period when production is cheaper

challenges of existing in a market as a small low quality producer this paper explores the strategy of a small firm entering a monopolist s market thereby creating a duopoly market the small firm avoids competing with the larger incumbent firm by producing a lower quality product at a lower price the model here establishes an equilibrium under a specific set of assumptions and examines how exogenous factors affect prices qualities and profits although the strategy might allow the firm to enter and earn a profit the market conditions may make this position much less desirable to that of the large firm for several reasons in the case explored here where tastes for the product are uniformly distributed the small firm s profit is about six percent of that of the larger firm the smaller firm is more severely threatened by the entrance of a third firm furthermore even if the smaller firm can cut costs its position is not well suited for exploiting such increases in efficiencies

endogenous timing in duopoly games stackelberg or cournot equilibria abstract simultaneous versus sequential play is studied in an extended game in a preplay stage players decide whether to select actions in the basic game at the first opportunity or to wait until observing their rivals first period actions in one extended game players first decide when to select actions without committing to actions in the basic game the equilibrium has a simultaneous play subgame unless payoffs in a sequential play subgame pareto dominate those payoffs in another extended game deciding to select at the first turn requires committing to an action both sequential play outcomes are the equilibria only in undominated strategies

king makers local leaders and ethnic politics in africa much of the literature on electoral politics in africa has focused on one mechanism of electoral mobilization reliance on shared ethnic identity between politicians and voters on the contrary the author argues that politicians pursue two distinct modes of nonprogrammatic electoral mobilization 1 by directly relying on the support of voters from one s own ethnic background and 2 by indirectly working through electoral intermediaries local leaders who command moral authority control resources and can influence the electoral behavior of their dependents yet the power of local leaders varies greatly hence the option to use electoral intermediaries is not available in all settings the choice of electoral mobilization affects national electoral outcomes by severing the direct link between politicians and voters intermediaries reduce a campaign s reliance on shared identity and create cross ethnic electorates the evidence for this argument is based on original interviews with political leaders collected during fieldwork in senegal and benin during the 2006 7 electoral season media coverage of elections and a historical analysis of first mass elections in the 1950s

simultaneous and sequential price competition in heterogeneous duopoly markets experimental evidence abstract we investigate simultaneous and sequential price competition in duoply markets with differentiated products and random matching of symmetric firms we find that second movers gain from the sequential structure in comparison to simultaneous move markets whereas first movers do not as predicted by the theory there is a significant first mover disadvantage in the sequential game finally we report the results of control treatments varying the matching scheme and the mode of eliciting choices strategy method vs standard sequential play

being a leader or a follower this paper deals with the analysis of conflicts in duopoly situations in particular with the distribution of roles in the von stackelberg framework which firm will be the leader which firm the follower under what circumstances will firms find a mutually advantageous distribution of roles will they fight for leadership or followship in von stackelberg s analysis of duopoly either firms do not choose their respective roles or they fight for leadership this situation is due to the particular strategy space namely the quantity to produce of an homogeneous good we extend here the strategy space to price quantity pairs we show that if costs are identical or similar then both firms will prefer the role of follower if there is a significant cost differential between the firms then the non cooperative equilibrium can only be of two types either the less efficient firm will act as the leader selling a limited quantity at a low price and the more efficient firm as the follower selling to the residual demand at a higher price or the more efficient firm acting as leader will drive the less efficient firm out of the market by adopting a limit pricing strategy but in so doing that firm makes less profits than if it acts as follower we suggest that it is not unreasonable to expect that firms in a duopoly framework will tend to coordinate on their mutually advantageous role distribution even if they compete in a non cooperative strategic way in terms of both prices and quantities

stackelberg versus cournot a differential game approach abstract we propose an infinite horizon differential oligopoly game where at each point in time m stackelberg leaders and n m stackelberg followers exploit a common pool renewable resource and sell their harvest in the marketplace at a price that depends on total harvest we derive a feedback generalized stackelberg nash cournot equilibrium a generalization of the feedback stackelberg equilibrium nesting feedback stackelberg and feedback cournot as special cases we proceed with a comparison between the feedback stackelberg and the feedback cournot equilibria and find a number of interesting results in contrast with static oligopoly theory as to the relative efficiency of the two equilibria we show that the cournot equilibrium can be more efficient than the stackelberg equilibrium this holds true in the short run at the steady state and in terms of discounted welfare

oligopolistic competition for market share via voluntary excess supply an oligopoly model is developed in which firms produce a homogeneous good but there is no automatic price adjustment mechanism to ensure that the market clears though market demand is certain firm demand becomes random if producers oversupply the market because consumers are indifferent as to which firm s output they purchase firms may have the private incentive to oversupply the market in effect competing for market share equilibrium with excess supply is shown to exist in models in which price is determined exogenously and in which firms choose price in the latter case equilibrium price is invariant to entry and cost decreases the normative aspects of the equilibria are discussed

second mover advantage and price leadership in bertrand duopoly we consider the issue of first versus second mover advantage in differentiated product bertrand duopoly with general demand and asymmetric linear costs we generalize existing results for all possible combinations where prices are either strategic substitutes and or complements dispensing with common extraneous and restrictive assumptions we show that a firm with a sufficiently large cost lead over its rival has a first mover advantage for the linear version of the model we invoke a natural endogenous timing scheme coupled with equilibrium selection according to risk dominance the analysis yields as the unique equilibrium outcome sequential play with the low cost firm as leader

the control of politicians in divided societies the politics of fear autocrats in many developing countries have extracted enormous personal rents from power in addition they have imposed inefficient policies including pervasive patronage spending i present a model in which the presence of ethnic identities and the absence of institutionalized succession processes allow the ruler to elicit support from a sizeable share of the population despite large reductions in welfare the fear of falling under an equally inefficient and venal ruler that favours another group is enough to discipline supporters the model predicts extensive use of patronage ethnic bias in taxation and spending patterns and unveils a new mechanism through which economic frictions translate into increased rent extraction by the leader these predictions are consistent with the experiences of bad governance ethnic bias wasteful policies and kleptocracy in post colonial africa

stackelberg versus cournot equilibrium we reconsider stackelberg s classical critique of the cournot duopoly in the framework of endogenous timing for two player games for quantity duopoly we provide different sets of minimal conditions directly on the demand and cost functions yielding respectively the simultaneous and the two sequential modes of play while our findings essentially confirm the predominance of the former they also indicate that the latter is natural under some robust but restrictive conditions no extraneous assumptions such as concavity existence or uniqueness of equilibria are needed and the analysis makes crucial use of the basic results from the theory of supermodular games classification numbers b21 c72 d43 l13 c 1999 academic press

strategic market coverage in spatial competition abstract we consider in this paper competition through prices and market coverages in a spatial duopoly we characterize and compare the stackelberg equilibria and the bertrand equilibria we show that when the cost of informing the consumers is small duopolists always choose to inform all consumers in the bertrand equilibrium but the leader in the stackelberg equilibrium may choose not to inform everyone when the duopolistic competition is intense enough thereby generating overlapping markets in equilibrium prices may be strategic complements strategic substitutes or be strategically independent considering market coverage as chosen by the firms changes the conventional relationships between differentiation profits and markups

the 1 5th mover advantage there has been much discussion about the timing of moves in games however one assumption usually goes unquestioned namely that of an irrevocable commitment of the first mover in many cases this is not realistic since final commitments are often preceded by actions that are binding only to a limited degree partial commitments an example is the announcements of price changes i analyze a game in which the degree of a partial commitment is endogenized in the case of strategic complements a player profitably makes use of the possibility to commit partly she chooses a role somewhere between first and second mover which gives her a 1 5th mover advantage

pre commitment and flexibility abstract this paper considers several related strategic duopoly settings in which uncertainty creates an option value from retaining flexibility by delaying investment or output decisions until after uncertainty is resolved this value of flexibility must be weighed against the strategic value of pre commitment yielding a trade off between flexibility and pre commitment we obtain a simple characterization of the timing of output decisions as a consequence of the degree of uncertainty particular attention is paid to the implications for entry deterrence by an incumbent firm and to the possible flexibility enhancing effects of investment in capital

asymmetric information acquisition and behavior in role choice models an endogenously generated signaling game the authors employ a static homogeneous good duopoly model wherein firms can choose to produce in one of two periods the model allows agents to acquire information and then traces the impact of the information pattern on subsequent production behavior asymmetric information acquisition leads to a unique production role choice pattern the informed uninformed firm chooses to assume the leader s follower s role moreover if information is costly the typical equilibrium involves only one firm acquiring information thus identical firms with identical opportunities choose to become asymmetrically informed and produce sequentially this is the unique refined equilibrium outcome copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

industrial demand for natural gas inter industry variation in new york state abstract this study investigates the variability in demand for natural gas by manufacturing industries in new york state the study uses a dynamic model using the three stage least squares method which allows for the calculation of both long and short run elasticities the demand model the price equations for the major natural gas using industries and the estimation results are presented and analysed it differs from previous studies of natural gas demand in that it is done at the sic two digit industry level using state specific data rather than highly aggregated national data

endogenous price leadership we consider a linear price setting duopoly game with differentiated products and determine endogenously which of the players will lead and which one will follow while the follower role is most attractive for each firm we show that waiting is more risky for the low cost firm so that consequently risk dominance considerations as in harsanyi and selten a general theory of equilibrium selection in games mit press cambridge ma 1988 allow the conclusion that only the high cost firm will choose to wait hence the low cost firm will emerge as the endogenous price leader

tax me if you can ethnic geography democracy and the taxation of agriculture in africa it is typically assumed that african leaders enact policies that benefit their ethnoregional group using all types of patronage crop production and political power are geographically concentrated in many african countries and this paper exploits this overlap to cast doubt on this conventional wisdom it shows using data on 50 country crop combinations that cash crop farmers who are ethnically identified with the head of state face higher taxes furthermore democratic regimes impose lower taxes this paper shows that farmers who have few alternatives face higher taxes african leaders have used local intermediaries to exert control over the countryside and to ensure that farmers do not support alternative candidates it suggests that as leaders are better at selecting and monitoring these intermediaries in their home areas they can extract more from the majority at home than abroad using taxes on cash crops which are regionally but not individually targetable

price and quantity competition in homogeneous duopoly markets abstract a noncooperative duopoly game is formulated in which the quantity player sells its entire amount up to consumer demand while the price player supplies residual demand both firms transact at the same price depending on the ordering two stage subgame perfect equilibria are equivalent to simultaneous price and quantity nash equilibria or include also the stackelberg equilibrium in any case a firm prefers to be the quantity player

cost of delay and endogenous price leadership abstract we study the effects of discounting in a standard endogenous price leadership model we show that there will be occasional changes in the identity of the leader with any cost of delay or discounting however small by analyzing the incentives that induce a firm to take up the leader position we derive positive predictions about which firm will lead most price changes firms with shorter reaction times will be more likely to become the price leader as will firms with lower cost of delay if the firms reaction times are similar

dominant firms and their alleged decline abstract by way of a survey of recent literature on the theory of strategic competition this paper focuses on the question of whether dominant firms decline the traditional argument suggesting decline is found to be based on a rather unsatisfactory modelling of dominance and more acceptable conceptualizations suggest that such privileged positions will persist

stackelberg equilibrium in oligopoly an explanation based on managerial incentives abstract this paper shows that in a model of managerial delegation in a duopoly if an owner s decision to hire a manager is modeled explicitly then the subgame perfect equilibrium may coincide with the stackelberg solution interestingly this can happen even when the cost of hiring a manager is the same for the owner of each firm

production in advance versus production to order abstract we use a theoretical framework to compare production in advance type and production to order type environments carrying out our analysis in the framework of a symmetric capacity constrained bertrand edgeworth duopoly game we prove that the equilibrium profits are the same in case of production in advance and production to order in addition advance production results in higher prices than production to order if both games have an equilibrium in nondegenerated mixed strategies

endogenous diffusion of technology abstract this paper presents a positive theory of diffusion of technology it examines a two period model strategic firms are confronted by a process technology with an uncertain reduction in marginal costs the uncertainty is automatically resolved between the two periods adoption in the first period yields a leadership advantage relative to firms that do not adopt while simultaneous adoption by firms results in a cournot equilibrium the firms strategies are both production quantities and adoption timings these decisions are made at the same time thus firms face a trade off between early adoption and possibly reaping first mover advantages on one hand and deferring the adoption decision until after all the uncertainty is resolved but face the possibiity of being a follower in the market interestingly an endogenously determined diffusion rate is obtained as a pure strategy nash equilibrium of this game this means that while adoption and diffusion of technology results with probability one diffusion of a bad innovation is also possible it is also shown that in a market with one large firm and a nonatomic continuum of small firms there is a unique nash equilibrium in which the large firm adopts first and is a stackelberg leader and all the small firms decide whether or not to adopt after the uncertainty is resolved the implication of this result is simply that the diffusion of technology is to some extent determined by the relative size of firms in the industry

clientelism and voting behavior evidence from a field experiment in benin the author conducted a field experiment in benin to investigate the impact of clientelism on voting behavior in collaboration with four political parties involved in the 2001 presidential elections clientelist and broad public policy platforms were designed and run in twenty randomly selected villages of an average of 756 registered voters using the survey data collected after the elections the author estimated the effect of each type of message by comparing voting behavior in the villages exposed to clientelism or public policy messages treatment groups with voting behavior in the other villages control groups the author found that clientelist messages have positive and significant effect in all regions and for all types of candidates the author also found that public policy messages have a positive and significant effect in the south but a negative and significant effect in the north in addition public policy messages seem to hurt incumbents as well as regional candidates finally the evidence indicates that female voters tend to have stronger preference for public policy platforms than male voters

firm scale and the endogenous timing of entry a choice between commitment and flexibility abstract this paper presents a model of stochastic oligopoly with demand uncertainty where firms endogenously choose entry timing we examine two extreme types of market structure and show that the equilibrium correspondence that connects them is continous with two identically sized firms there are symmetric cournot type equilibria where the probability of early entry declines with greater uncertainty and for low uncertainty two asymmetric equilibria with one large firm with a continuum of nonatomic firms there is a unique stackelberg equilibrium we conclude that the behavior of a dominant firm with a finite fringe can be approximated by stackelberg equilibrium journal of economic literatureclassification numbers d21 l11

clientelism and vote buying lessons from field experiments in african elections electoral clientelism and vote buying are widely perceived as major obstacles to economic development this is because they may limit the provision of public goods in this paper we review the literature on clientelism and vote buying and propose the use of field experiments to evaluate empirically the consequences of these phenomena we provide an overview discuss implementation and interpret the main results of recent field experiments conducted by the authors in west african countries clientelism and vote buying seem to be effective and to enjoy widespread electoral support the results suggest that increased access to information and political participation by women may limit clientelism in addition voter education campaigns may undermine the effects of vote buying on voting behaviour we argue that our findings may inform the design of development aid interventions as a way effectively to increase public good political accountability we also discuss directions for fruitful future research copyright 2009 oxford university press