strategic behavior in contests comment almost by definition contests involve strategy this is especially true in contests between unevenly matched contenders in a recent article avinash dixit 1987 explored strategic commitment in contests between a favorite and an underdog the favorite is defined as the player whose chance of victory exceeds one half at the nash equilibrium an underdog s chance is less than one half dixit concludes that if the favorite has the opportunity to move first then he will overcommit effort compared with the nash equilibrium an important implication of the favorite overcommitting effort is that strategic behavior leads to greater social costs see gordon tullock 1980 the opposite holds if the underdog has the opportunity to move first this paper demonstrates that the favorite will never overcommit effort given endogenous order of moves the favorite finds it advantageous to wait until the underdog moves surprisingly the underdog s best strategy is not to wait but to make the first move throwing the first punch the equilibrium order of play is for the underdog to move before the favorite in this equilibrium one never observes overcommitment of effort consequently extending dixit s model to allow for endogenous order of moves suggests that strategic behavior in contests will lead to undercommitment compared with nash behavior

the regional financial sector a scottish case study dow s c 1992 the regional financial sector a scottish case study reg studies 26 619 631 the regional finance literature suggests that financial market segmentation may affect regional economic activity but that the uk financial sector is sufficiently integrated to rule out this effect this paper attempts to broaden the scope of the debate by considering the credit creating behaviour of the banking sector together with the interdependent financial behaviour of all other sectors in a region it is concluded that financial behaviour in this broad sense affects regional activity even in an integrated national financial market in particular financial integration may adversely affect the allocation of new credit to a peripheral region the argument is assessed by considering the scottish case dow s c 1992 le secteur financier regional cas d etude de l ecosse reg studies 26 619 631 la documentation relative au secteur financier regional laisse supposer que la segmentation du marche finan

contests with multiple rounds this paper studies contests where players have the flexibility to add to their previous efforts after observing their rivals most recent effort in an intermediate stage it is found that 1 contrary to previous findings the stackelberg outcome where the underdog leads and the favorite follows cannot be an equilibrium 2 there are multiple subgame perfect equilibria all occurring on the underdog s usual one shot reaction function in between and including the one shot cournot nash and stackelberg outcome with the favorite leading 3 the total equilibrium effort is typically greater than or equal to what a one shot cournot nash play would predict and 4 in settings where players can choose whether or not to disclose their early actions to the rival both the favorite and the underdog disclose in equilibrium applications in sports lobbying and r d races are discussed

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

on the endogeneity of cournot nash and stackelberg equilibria games of accumulation abstract we characterize equilibria of games with two properties i agents have the opportunity to adjust their strategic variable after their initial choices and before payoffs occur but ii they can only add to their initial amounts the equilibrium set consists of just the cournot nash outcome one or both stackelberg outcomes or a continuum of points including the cournot nash outcome and one or both stackelberg outcomes a simple theorem that uses agents standard one period reaction functions and the one period cournot nash and stackelberg equilibria delineates the equilibrium set applications include contribution oligopoly and rent seeking games

backward induction algorithm for a class of closed loop stackelberg games abstract in the paper a new deterministic continuum strategy two player discrete time dynamic stackelberg game is proposed with fixed finite time duration and closed loop information structure the considered payoff functions can be widely used in different applications mainly in conflicts of consuming a limited resource where one player called leader is a superior authority choosing strategy first and another player called follower chooses after in case of convex payoff functions and certain parameter values we give a new particular backward induction algorithm which can be easily realized to find a leader follower equilibrium of the game in a certain sequential equilibrium realization from the last step towards the first one with respect to the current strategy choices of the players considerations on uniqueness and game regulation i e setting parameters of the game to achieve a predefined equilibrium are also provided the finite version of the game with finite strategy sets is also given along with its simplification and solution method several practical examples are shown to illustrate the comprehensive application possibilities of the results

the political economy of israeli protectionism an empirical analysis the aim of this study was to examine the tariff structure in israel in terms of the four main theoretical models of endogenous commercial policy the empirical results for levels of protection in israel support several of the models in particular the pressure group model performs well and especially the variable that represents the lobbying power of the histadrut public sector in israel this is consistent with the longstanding political power of the histadrut in israel the histadrut s role in the israeli economy rises above the western concept of a labor union and takes on a quasi governmental function the clearest example of this elevated status is seen when the government included the histadrut as part of the commission charged with the responsibility of carrying out the nominal liberalization process of the 1960s evidently it is this kind of political economic power that allowed the histadrut to affect the level of protection histadrut dominated industries received

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

hub and spoke free trade areas theory and evidence from israel we study how the sequential formation of free trade areas affects trade flows between member countries in a three country three good model of comparative advantage if two countries have an fta and both sign a similar agreement with the third trade between the two decreases however if only one of them signs an additional fta a hub and spoke pattern arises and trade between the initial members increases israel s experience lends strong support to our model trade between israel and the eu subject to an fta since 1975 increased by an additional 29 after the introduction of the us israel fta in 1985 on etudie comment la formation sequentielle de zones de libre echange affecte les flux commerciaux entre les pays membres dans un modele d avantage comparatif avec trois pays et trois biens si deux pays ont un accord de libre echange et qu ils signent tous deux un accord similaire avec un tiers pays le commerce entre les deux pays originaux decroit cependant si seulement un des deux pays originaux signe un accord avec le troisieme un reseau en etoile emerge et le commerce entre les deux payx d origine s accroit l experience d israel donne un fort support au modele le commerce entre israel et l union europeenne sujet a un accord de libre echange depuis 1975 s est accru de 29 apres l introduction de l accord de libre echange entre israel et les etats unis en 1985

commitment robust equilibria and endogenous timing abstract this paper investigates which equilibria of a game are still viable when players have the opportunity to commit themselves to that end we study a model of endogenous timing in which players face the trade off between committing early and moving late it is shown that mixed resp pure equilibria of the original game are subgame perfect resp persistent in the timing game only when no player has an incentive to move first consequently mixed equilibria are viable only if no player has an incentive to move first one needs strong evolutionary solution concepts to draw that conclusion for pure equilibria journal of economic literature classification number c72

productivity or politics the determinants of the indonesian tariff structure abstract the paper considers whether the structure of the effective rate of protection across manufacturing sectors in indonesia is better explained by variables that measure economic efficiency or those capturing the potential political influence wielded by those active in various sectors econometric estimates for 1984 indicate that tariffs were made to measure to offset the degree of low productivity in individual sectors political influence does not appear to significantly affect the granting of protection

strategic managerial incentives in a two period cournot duopoly abstract this paper examines the nature of optimal managerial incentives in the context of a duopoly marked by competition between the firm s managers in a dynamic production environment if the marginal cost of production falls moderately over time or remains unchanged there exists an equilibrium where one owner requires her manager to maximize profit whereas the rival owner requires her manager to maximize sales revenue the profit maximizing manager turns his firm into a stackelberg leader while the sales revenue maximizing manager turns his firm into a stackelberg follower further the profit maximizing manager may generate a larger firm profit relative to the sales revenue maximizing manager

banks and regional development an empirical analysis on the determinants of credit availability in brazilian regions crocco m faria silva f paulo rezende l and rodriguez fuentes c j banks and regional development an empirical analysis on the determinants of credit availability in brazilian regions regional studies this paper studies the influence that liquidity preference and bank lending strategies might have played in the determination of bank credit availability in brazilian regions during the period 1999 2008 it puts forward the argument that in remoter and less developed regions the liquidity preference of agents is higher and fluctuates along business cycles reducing regional credit availability in downturns due to both a contraction in supply and the demand for credit in remoter regions and producing a more unstable pattern for credit availability alongside business cycles empirical evidence for the brazilian regions during the period 1999 2008 is provided to support this view

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

dynamic commitment games efficiency and coordination abstract an important form of commitment is the ability to restrict the set of future actions from which choices can be made we study a simple two player dynamic game of complete information which incorporates this type of commitment for a given initial game the players engage in an endogenously determined number of commitment periods before choosing from the remaining actions we show the existence of equilibria with pure strategies in the commitment periods partial characterization results for general games capture the tradeoff between commitment and deterrence the equilibrium outcome is unique and efficient for two classes of games including pure coordination and stag hunt games

the spatial features of recent crises in a developing country analysing regional economic resilience for the brazilian case during the last decade the brazilian economy was affected by two important recessive shocks however the spatiality of these shocks is still neglected by scholars and policy makers this study an

regional finance a survey the role of money and nancial markets in the regional matters 1 economy has been attracting increasing attention in we start with a review of the treatment of money recent years it has been a topic of interest for longer in regional economics and then turn to the much

stackelberg rent seeking in this paper i present a formal analysis of rent seeking games in which the players do not move simultaneously i consider rent seeking situations where the players are risk neutral and may value the prize differently the subgame perfect equilibrium outcome in this stackelberg game provides several surprising and interesting results i extend the problem to deal with cases of in complete information concerning the value a player has for the politically contestable rent

contests a comparison of timing and information structures we study a model of imperfectly discriminating contests with two ex ante symmetric agents we consider four institutional settings contestants move either sequentially or simultaneously and in addition their types are either public or private information we find that an effort maximizing designer of the contest prefers the sequential to the simultaneous setting from an ex ante perspective moreover the sequential contest pareto dominates the simultaneous one when the contestants types are sufficiently negatively correlated regarding the information structure the designer ex ante prefers private information while the contestants prefer public information

determinants of the tariff structure of the israeli industrial sector 1965 1977 abstract this paper examines the determinants of the tariff structure of the israeli manufacturing sector in the mid 1960s and late 1970s a period marked by considerable trade liberalization the empirical results point to the made to measure nature of the tariff structure i e relatively inefficient industries were granted higher rates of protection the relative inefficiency measure which was derived from the ces production function kept a high explanatory power along a wide range of substitution elasticities the empirical results also show that in the early 1960s tariffs favoured low wage labor intensive industries while in the late 1970s industries with high levels of concentration lobbied successfully for higher levels of protection

emu and the regional impact of monetary policy rodriguez fuentes c j and dow s c 2003 emu and the regional impact of monetary policy reg studies 37 969 980 in this paper we focus on a topic which has been attracting renewed interest because of monetary unification in europe the regional dimension of national monetary policies most of the debate over the regional implications of the euro has been developed within the optimum currency area framework according to this theory european monetary policy would have regional effects when the countries of the euro zone had such structural differences as to produce asymmetric shocks these asymmetrical effects could only be offset by labour mobility and wage price flexibility however we argue here that in addition european monetary policy may have more general regional effects including in particular by producing a higher instability in the pattern of credit availability for some peripheral regions this latter possibility and the forces underlying it are explored here both at the theoreti

endogenous timing in general rent seeking and conflict models we examine simultaneous versus sequential choice of effort in a two player contest the timing of moves determined in a preplay stage prior to the contest subgame as well as the value of the prize is allowed to be endogenous contrary to endogenous timing models with an exogenously fixed prize the present paper finds the following 1 players may decide to choose their effort simultaneously in the subgame perfect equilibrium spe of the extended game 2 the spe does not need to be unique in particular there is no unique spe with sequential moves if the direct costs of effort are zero 3 symmetry among players does not rule out incentives for precommitment to effort locally away from the cournot nash level 4 finally there may be no correlation between win probability and strategic incentives in our framework a finding most central in the analysis of fixed prize contests

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

endogenous leadership in a new market in this article i analyze strategic investment under uncertainty in a new market where firms face a tradeoff between commitment and flexibility the model predicts asymmetric equilibria under fairly general conditions even though firms are ex ante identical and have symmetric opportunities to enter the market in equilibrium one firm commits to early investment and the other firm follows a wait and see strategy in the ex post outcome firms end up with asymmetric sizes if the market profitability turns out close to or lower than expected firms end up in symmetric position if the market turns out highly profitable if uncertainty is small the model yields approximately stackelberg outcomes