is development path dependent or political a reinterpretation of mineral dependent development in botswana abstract poor management of earnings from valuable natural resources results in a syndrome known as dutch disease characterised by real exchange rate appreciation high labour costs and structural imbalances in economic development often a product of rentier politics dutch disease undermines long term economic performance in resource dependent economies resulting in a resource curse the conventional wisdom argues that institutions and state development at the time of a resource boom lock countries into divergent developmental trajectories i argue that political coalitions lay the foundation for development of state and other institutions and that changes in coalitions drive changes in policy responses to resource booms botswana s experience illustrates the argument botswana has not entirely avoided symptoms of dutch disease but has kept them largely in check despite the fragility of state institutions when diamonds were discovered a broad and stable political coalition during the first decade

natural resources curse or blessing are natural resources a curse or a blessing the empirical evidence suggests that either outcome is possible this paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources these include that a resource bonanza induces appreciation of the real exchange rate deindustrialization and bad growth prospects and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law corruption presidential democracies and underdeveloped financial systems another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad induces corruption especially in nondemocratic countries and keeps in place bad policies finally resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets the survey also offers some welfare based fiscal rules for harnessing resource windfalls in developed and developing economies

competition and corporate performance are people right to think that competition improves corporate performance my investigations indicate first that there are some theoretical reasons for believing this hypothesis to be correct but they are not overwhelming furthermore the existing empirical evidence on this question is weak however the results reported here based on an analysis of around 670 u k companies do provide some support for this view most important i present evidence that competition as measured by increased numbers of competitors or by lower levels of rents is associated with a significantly higher rate of total factor productivity growth

does the resource curse hold for growth in genuine income as well summary existing studies analyzing the so called resource curse hypothesis regress growth in gross domestic product gdp on some measure of resource intensity this is problematic as gdp counts natural and other capital depreciation as income deducting depreciation from gdp to arrive at genuine income we test whether the curse still holds true we find supporting evidence but the growth disadvantage of resource intensive economies is slightly weaker in terms of genuine income than gdp we suggest that this provides additional but somewhat weak and limited evidence in support of those who argue that the curse is partly due to unsustainable overconsumption

some examples of dynamic cournot duopoly with inventory this article analyzes a two period game where firms can produce inventory in the first period for sale in the second period we assume that revenues and costs are time invariant and that the firms are symmetric we focus on the nature and the existence of the subgame perfect equilibrium of this model we use examples to show that the nash value functions defined on the joint inventory vector are likely to be ill behaved in particular they need not be concave nor even continuous in the firm s own inventory as a result asymmetric equilibrium is possible when average production costs are falling single firm operation can occur in equilibrium nonexistence is also a distinct possibility

the green paradox and budgetary institutions abstract we examine oil production strategies in response to the rise of alternative energy in context of saudi arabia and the united states in a unified simultaneous equation model sem over the period 1976 2015 we investigate the extent to which budget balance behaviour explains the nature of oil production strategies we find that green regulations have a positive impact on u s oil production while an inverse relationship holds for saudi arabia we argue that the nature of budgetary institutions prevents saudi arabia from following a profit maximising behaviour saudi arabia is incentivised to ensure political cohesion through adopting a procyclical fiscal policy rather regulators seem incentivised to channel surplus towards individuals to gain popularity in the united states a thriving shale oil industry is a plausible rationale for u s production strategies also known as a weak green paradox this is problematic for climate change initiatives to reduce global emissions climate experts may wish to pay more attention to the supply side of oil markets when designing decarbonisation plans the results challenge conventional wisdom of the green paradox neglecting the role of incentive structure between different types of oil producers

oil shocks and subnational public investment the role of institutions in regional resource curse abstract theoretical and empirical studies on oil price shocks have mainly focused on measuring its relationship with national macroeconomic performance in developing countries nevertheless research is scarce on the effects of natural resource booms on local governments and even more on public investment using a difference in differences strategy this paper contributes to identifying the causal effects of the recent oil boom in colombia 2008 2016 on subnational public investment our results suggest that the rise in international oil prices had mostly positive and disproportionate effects on public investment in oil producing departments and municipalities although municipalities and departments prioritized different sectors both increased their investments in sectors with high social returns suggesting a lower likelihood of a resource curse we also found that an institutional reform in 2012 was a source of heterogeneity and the main driver of the causal effects on subnational public investments

excess capacity as a barrier to entry an empirical appraisal this paper examines excess capacity barriers to entry and investment dynamics in a sample of thirty eight chemical product industries logit and log linear models of investment behavior are estimated and specific case examples are considered the results show that incumbents rarely built excess capacity pre emptively in an effort to deter entry in general entrants and incumbents exhibited similar investment behavior

inefficiency of subgame optimal entry regulation the literature on excess entry shows that the free entry equilibrium number of firms may be greater than is socially optimal and proposes government entry regulation as a remedy this article tries to show that such a policy recommendation is misleading a two period three person entry game model which explicitly includes second best government shows that entry regulation aimed at preventing excess entry actually induces the incumbent to behave strategically against the government and makes the final outcome socially suboptimal compared to cases in which there is no government intervention entry regulation is subgame optimal however it is globally suboptimal

contestable markets under uncertainty in this article we present a model of a market which is ex post contestable we show that in a market characterized by uncertainty a firm will face a tradeoff between efficiency and flexibility and generally will make some precommitments to take advantage of ex ante technologies we show that in the face of potential entry the incumbent will increase his precommitments and in so doing will affect the probability of entry the degree of market contestability is therefore endogenously determined by the choice of precommitments the extent to which precommitments will be used to affect entry probabilities is shown to depend on the efficiency of ex ante production adjustment costs and the degree of uncertainty in particular we show that the market becomes more contestable as the relative efficiency of ex post production increases and as market conditions become more uncertain

false prophet or genuine savior assessing the effects of economic openness on sustainable development 1980 99 while many herald globalization the increasing interconnectedness of national economies to be associated with rising standards of living across the globe others fear its effects on sustainability antiglobalization forces and environ mentalists view these developments as a threat to the welfare of future generations because of profligate and excessive current consumption this study is the first to estimate the effects of dependence on trade foreign direct investment fdi and an index of economic freedom on the world bank s measure of sustainability the gen uine savings rate which measures the rate at which investment in the total stock of manufactured human and natural capital exceeds its depreciation contrary to pessi mists fears our indicators of economic openness show positive effects on sustain ability results that are robust to sample size testing procedure and several alternative specifications the results support those who suggest that distorted economies tend to be both inefficient and damaging to future generations if increasing trade fdi and economic freedom are hallmarks of globalization then worries about its effects on future well being are misplaced

resource allocation to defensive marketing and manufacturing strategies abstract in this paper we investigate the coordinated use of marketing and manufacturing strategies to formulate a defensive business strategy for an incumbent firm upon market entry while defensive marketing strategies have been researched extensively little has been done on defensive manufacturing strategies and even less on coordinating these two we propose a formulation for the joint formation of a defensive strategy by the marketing and production functions under budget constraint considerations the incumbent firm may allocate its resourcesto advertising and distribution expenditures as well as to manufacturing investments to reduce the unit production cost the incumbent firm has also the option of simply allocating all of its resources purely to advertising and distribution we show that while there exist cases where the optimal reaction to entry involves investments in manufacturing improvements there are also cases where defense is in marketing strategies alone we identify the market conditions that promote such reactions to entry and also provide sensitivity analysis

learning to love the dutch disease evidence from the mineral economies abstract recent literature proposes that a booming minerals sector may not only lead to dutch disease effects it may also be a development curse mineral economy case studies have tentatively confirmed this recourse curse thesis this paper examines the long run economic and development performance of a more general grouping of mineral based economies and finds little corroborating evidence

profit raising entry common wisdom suggests that entry reduces profits of incumbent firms on the contrary we demonstrate that if the incumbents differ in marginal costs and the entrants behave like stackelberg followers then entry may benefit the cost efficient incumbents while hurting the cost inefficient ones and the total outputs of all incumbents may be higher under entry

entry and managerial incentives abstract this paper presents a two period full information model of entry where owners of incumbent and entrant firms endogenously select the incentive schemes for their managers it is shown that when output decisions are delegated to managers the incumbent s owner chooses to base incentive schemes only partly on profit but if output decisions are reached via nash bargaining between managers the incumbent s owner will base the reward on profit alone the entrant never bases the incentive scheme solely on profit if there is a sufficiently high fixed cost of entry then the incumbent can deter entry by providing management with appropriate incentive schemes

capacity outpl t and sequential entry comment two behavioral assumptions that are often made in the industrial organization literature are that an established firm or group may deter entry either through limit pricing the sylos postulate or by holding excess capacity the excess capacity hypothesis in an interesting recent article in this review 1981 daniel spulber examines these behavioral assumptions to see whether they are consistent with rational behavior by an established firm spulber s analysis is based on a two firm two period game model in which the established firm is given a first in advantage by introducing this dynamic element into the model spulber is able to explicitly address the issue of the optimality of entry deterring behavior spulber finds that the use of limit pricing and or excess capacity to deter entry is rational only under a very limited set of circumstances in particular when the second period outcome is determined by a cournot nash equilibrium he derives the following results 1 the first period output of the established firm is always less than or equal to the first period output produced by a firm not anticipating entry the established firm essentially accommodates entry and limit pricing does not occur 2 the established firm never holds more capital than the amount that would minimize its production costs given its output choices in periods one and two this comment takes issue with spulber s conclusions about the cournot nash case it will be shown that the two results cited above may be reversed when the production technology is characterized by variable proportions this reversal hinges on the particular type of nash equilibrium employed in the analysis of the two period model spulber implicitly uses a nash equilibrium that is not subgame perfect 2 it is shown below that when one requires the nash equilibrium to be subgame perfect both limit pricing and excess capital investment outcomes are possible for the variable proportions technology case the subgame perfection property thus seems to capture an important strategic element in decision making for the established firm in some cases this type of strategic behavior leads to entry barriers that would not exist under innocent profit maximization by the established firm strategic entry barriers are discussed by steven salop 1979 spulber s notation and assumptions about demand and costs are adopted below

market power productivity and the eu single market program evidence from a panel of italian firms abstract this paper provides empirical evidence on the impact the eu single market program has exerted on market power and total factor productivity in a large sample of italian firms both market power and total factor productivity are estimated by applying several extensions of the methodology developed by hall main findings can be summarised as follows firstly for the sample of 1992 most sensitive firms market power decreases by 50 in the smp implementation period compared to previous years whereas no clear pattern emerges for the other sub samples of firms secondly and less conclusively only for the sub sample of 1992 most sensitive firms a positive transitory shock to productivity growth rates is observed immediately after the announcement of the reform project overall these results are consistent with the long standing view that economic integration reduces firms market power and increases productivity via the removal of non tariff barriers

the paradox of plenty a meta analysis since sachs and warner s seminal article in 1995 numerous studies have addressed the link between natural resources and economic growth although the resource curse effect was commonly accepted at first many articles have challenged its existence and the results found in the literature are ambiguous in this paper we aim to quantitatively review this literature in order to i identify the sources of heterogeneity and ii assess the impact of natural resources on economic growth a meta analysis is performed on 69 empirical studies on the resource curse totaling 1 419 estimates our findings show that i only developing countries suffer from the resource curse although it is soft ii the way natural resources are taken into account is crucial to understand the heterogeneity found in the literature iii the negative impact of the volatility of the terms of trade on growth should be qualified an additional mra performed on indirect effects size also indicate that when institutions are at their best level the resource curse disappears and may be turned into a blessing

on the intergenerational allocation of natural resources it is known hartwick and others that under standard assumptions a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources will enjoy a consumption stream constant in time it is shown here that this result can be interpreted as saying that an appropriately defined stock of capital including the initial endowment of resources is being maintained intact and that consumption can be interpreted as the interest on that patrimony this seems like a useful rule of thumb for policy

firm turnover restructuring and labour productivity in transition the case of poland this article explores the impact of turnover and restructuring on labour productivity in the polish economy over the period 1988 to 1993 changes in aggregate productivity are decomposed into elements corresponding to productivity growth among survivors market share growth by survivors and the contributions of entering and exiting firms the traditional entry and exit effects begin to work as transition to a market economy progresses however initial productivity improvements are due to changes in market shares of the existing firms following the break up of large enterprises regression analysis shows that changes in the firm level productivity are affected by restructuring and a more competitive economic environment

resource curse an analysis of causes experiences and possible ways forward abstract higher prices for oil gas and mineral resources have again raised questions about how exporting countries can counter the challenges of resource curse international experience managing the risks of resource curse has varied summarising the continuing discussion on meeting the challenges of the resource curse this paper addresses four questions what are the positive and negative effects of high oil gas and mineral prices on exporters what have been the experiences with managing natural resource revenues can good institutions ensure that natural resource revenues have a positive impact on development and what is the direction for the way forward we argue that the current emphasis on institutions as a potential solution has largely ignored under what conditions institutions are formed and changed

free entry and social efficiency under vertical oligopoly we analyze a successive vertical oligopoly model that incorporates vertical relationships between industries and demonstrate that free entry in an industry that produces a homogeneous product can lead to a socially insufficient number of firms this is in contrast with the proevious findings that under cournot oligopoloy with fixed set up costs level of entry in the free entry equilibrium is socially excessive it has often been argued that this result can provide a justification for apparently anticompetitive entry regulations our finding yields an important policy implication that such a justification is not necessarily valid when vertical relationships ar taken into account

the incidence of entry in 3 oligopoly models three of the least satisfactory features of oligopoly theory are that the beliefs of firms are frequently arbitrary that the solution concept which reflects these beliefs used is taken as exogenous and that its role in conditioning the results is neglected the first criticism has been resolved to a large extent in the recent consistent conjectures literature bresnahan 1981 perry 1981 ulph 1983 for critical views see laitner 1980 or boyer and moreaux 1983 which characterizes equilibria having the property that firms hold locally correct conjectures about rivals reactions yet however satisfactory they are on the question of arbitrariness consistent conjectures unfortunately run afoul of the exogeneity criticism for it is by no means clear how firms come to possess the information needed to form such beliefs quite clearly the complete answer to the exogeneity question lies in models of information acquisition and evaluation by firms nevertheless it would be unwise to abandon static models wholesale for they can be useful if supplemented by a set of comparative static exercises revealing how variations in the solution concept itself conditions the results this paper advances the case for such a comparative statics with respect to solution concept primarily by discussing a somewhat unusual illustration much recent work has been devoted to entry and its effects on market performance but relatively little is known about how putative entrants are attracted to the market how much entry occurs in particular types of markets how fast it occurs how incumbents anticipate putative entrants and their speed of reaction thus while we have some feel for how variations in solution concept affect the market share or profits of a given set of firms in post entry equilibria e g shubik 1980 ulph and folie 1980 dixit 1980 spulber 1981 we have very little in the way of answers to questions like is there more entry when firms play cournot than when one firm acts as a stackelberg leader vis a vis the rest or does successful entry and even displacement of relatively inefficient incumbents occur more or less rapidly when firms behave as cournot than when industry conduct is described by some other solution concept such questions are natural for example if one is interested in the persistence of market power and its speed if any of decline section ii contains some slightly startling results which emerge from considering what is very much a special case of an entry process while the main interest in the results arises because they underline in a particularly emphatic manner the sort of interesting phenomena that can be revealed by such comparative static exercises i shall in section iii pursue these results as having interest in their own right and speculate on their robustness to various extensions of the model section i commences the whole discussion with some methodological remarks

entry collusion and capacity constraints it is arguably true that no single topic has held more of a fascination for students of industrial organization than the issue of entry deterrence this issue has been analyzed from many perspectives including the role of advertising and imperfect information in deterring entry 1 14 18 19 incentives confronting a monopoly seller of durable goods 3 4 incentives in the context of sequential entry 2 9 dynamic aspects of entry deterrence 10 13 and the role of excess capacity in deterring entry 22 23 dixit 5 6 discussed the incentives for an incumbent firm to deter entry in the presence of sunk costs in his models a firm must sink some capital prior to entering the industry and this sunk cost creates an entry barrier any potential entrant must pay the sunk costs prior to entering and the incumbent can deter entry by reducing the stream of profits sufficiently so that the entrant s post entry profit flow cannot cover its sunk cost ware 24 adapted dixit s work by allowing for a three stage game following the incumbent s decision the entrant decides upon entry in stage two paying the sunk costs at that time in stage three if entry occurred the firms play a quantity choosing game formby and smith 7 argue that rather than deterring entry the incumbent firm often has an incentive to allow entry and then collude with the entrant in this context the post entry cartel is asymmetric with the incumbent producing the larger amount and realizing the higher profits

concurrent renting and selling in a durable goods monopoly under threat of entry this article analyzes the choice of contract sales or rental of a durable goods monopolist facing a threat of future entry although in the absence of such a threat a monopolist would prefer to rent his entire output we show that the threat of entry alters that preference there is an optimal preentry contract mix involving both rental and sales if both firms behave as cournot duopolists after entry the optimal choice of preentry contracts enables the erstwhile monopolist to gain the same profits as he would if he behaved as a von stackelberg leader

resource intensity institutions and development summary we examine the relationship between resource abundance and several indicators of human welfare consistent with the existing literature on the relationship between resource abundance and economic growth we find that given an initial income level resource intensive countries tend to suffer lower levels of human development while we find only weak support for a direct link between resources and welfare there is an indirect link that operates through institutional quality there are also significant differences in the effects that resources have on different measures of institutional quality these results imply that the resource curse is a more encompassing phenomenon than previously considered and that key differences exist between the effects of different resource types on various aspects of governance and human welfare 2005 elsevier ltd all rights reserved

natural resources and economic growth a meta analysis summary an important question in development studies is how natural resources richness affects long term economic growth no consensus answer however has yet emerged with approximately 40 of empirical papers finding a negative effect 40 finding no effect and 20 finding a positive effect does the literature taken together imply the existence of the so called natural resource curse in a quantitative survey of 605 estimates reported in 43 studies we find that overall support for the resource curse hypothesis is weak when potential publication bias and method heterogeneity are taken into account our results also suggest that four aspects of study design are especially effective in explaining the differences in results across studies 1 controlling for institutional quality 2 controlling for the level of investment activity 3 distinguishing between different types of natural resources and 4 differentiating between resource dependence and abundance

firm growth and ownership in transition countries this paper uses data from firm level surveys to investigate firm performance for state owned privatized and de novo private firms in romania bulgaria and hungary after controlling for life cycle size and product market effects i find that de novo private firms outperform privatized and state owned ones c 1997 elsevier science s a

capital theory and the measurement of sustainable development an indicator of weak sustainability the measurement of sustainable development is not without considerable difficulties yet this should not detract from the positive advances that can be made in this direction in this paper we present one form that a weak sustainability indicator can take derived from a simple but intuitive savings rule it incorporates the idea that the level of overall capital stock should be non decreasing although subject to qualification at this stage some interesting results emerge from the application of the rule to 18 countries

trade and payments regime and the balance of payments in ghana abstract by 1982 the ghanaian economy was in the doldrums facing a severe foreign exchange constraint this state of the economy was attributed partly to the trade and exchange rate policies which had created distorsions and disincentives against exporting in particular and production in general since 1983 ghana has for the second time embarked on a trade and payments liberalization program this study examines the effect of the changing trade and payments regime on the balance of payments of ghana it provides some answers as to why the first liberalization episode was not sustained it also contrasts the experience of controlled and liberalized trade regime episodes the paper concludes by providing some lessons from the ghanaian experience

postentry investment and market structure in the chemical processing industries this article analyzes the investment response of incumbents to new entry in 39 chemical product industries the behavior of incumbents in highly concentrated industries differed from that of incumbents in low concentration industries in concentrated industries incumbents increased their rate of investment following entry but reduced investment to accommodate capacity expansions made by other incumbents this asymmetric response did not arise in less concentrated industries significant excess capacity existed in concentrated industries following entry but there is little evidence that incumbents built such capacity as a deterrent before entry thus the results support mobility deterrence theories rather than the conventional excess capacity deterrence argument

exporting the norwegian model the effect of administrative design on oil sector performance norway has administered its petroleum resources using three distinct government bodies a national oil company engaged in commercial hydrocarbon operations a government ministry to direct policy and a regulatory body to provide oversight and technical expertise norway s relative success in managing its hydrocarbons has prompted development institutions to consider whether this norwegian model of separated government functions should be recommended to other oil producing countries by studying ten countries that have used widely different approaches in administering their hydrocarbon sectors we conclude that separation of functions is not a prerequisite to successful oil sector development countries where separation of functions has worked are characterized by the combination of high institutional capacity and robust political competition unchallenged leaders often appear able to adequately discharge commercial and policy regulatory functions using the same entity although this approach may not be robust against political changes where institutional capacity is lacking better outcomes may result from consolidating commercial policy and regulatory functions until such capacity has further developed countries with vibrant political competition but limited institutional capacity pose the most significant challenge for oil sector reform unitary control over the sector is impossible but separation of functions is often difficult to implement

savings growth and the resource curse hypothesis an important connection between recent attempts to understand the determinants of economic growth and the measurement of sustainability is the finding of a negative and significant relationship between natural resource abundance and economic growth this is the so called resource curse hypothesis using cross country regressions we offer evidence that the curse may itself be a manifestation of the inability of governments to manage large resource revenues sustainably in particular these results offer another perspective on the resource curse hypothesis the countries where growth has lagged are those where the combination of natural resource macroeconomic and public expenditure policies have led to a low rate of genuine saving net saving adjusted for resource depletion

natural resources education and economic development economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries four main channels of transmission from abundant natural resources to stunted economic development are discussed a the dutch disease b rent seeking c overconfidence and d neglect of education public expenditure on education relative to national income expected years of schooling for girls and gross secondary school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries natural capital appears to crowd out human capital thereby slowing down the pace of economic development

demographic transition in resource rich countries a blessing or a curse summary this study argues that resource wealth is a key factor for understanding income effects of demographic transition we develop a simple model highlighting how the income effect of increased labor supply may depend on resource rents and provide empirical evidence that support the theoretical predictions using panel data covering the period from 1982 to 2006 for more than 120 countries we find a negative interaction effect between resource wealth and demographic transition on national income moreover the negative interaction effect does not depend on institutional quality and is found also across different samples

productivity growth in british manufacturing spatial variation in the role of scale economies technological growth and industrial structure this paper investigates the role of scale economies technological growth and industrial structure in creating spatial variation in manufacturing labour and total factor tfp productivity in britain separate estimates of a translog specification are presented for british manufacturing firms located in defined areas of the country over the period 1994 1998 the results show that tfp change due to scale economies and technological growth has been of much less important in influencing the output growth of manufacturing firms than input growth or industrial structure regarding the components of tfp technological growth has been the dominant force at play the analysis of average labour productivity identifies shifts to other factors of production and industrial structure as being the main determinants of change scale economies appear to have had a marginal role the results identify spatial patterns indicating that more favourable locational effects arise for firms in areas adjacent to large urban centre

the guardian state and its economic development model abstractthis article outlines the core features of a particular resource led development model the oil rich guardian state its key distinguishing feature from other resource rich economies consists in its strong economic welfare objective function which in line with its exceptional oil wealth renders its population amongst the wealthiest nations in the world however the guardian state also illustrates some of the negative externalities associated with resource wealth namely the policy dilemma of directing seemingly abundant financial resources into the economy the state faces a high propensity for waste and for the systemic dilution of market incentives thereby rendering sustained and self generating economic growth more difficult than in less resource rich economies

resource abundance and economic growth in the united states abstract it is a common assumption that regions within the same country converge to approximately the same steady state income levels the so called absolute convergence hypothesis focuses on initial income levels to account for the variability in income growth among regions empirical data seem to support the absolute convergence hypothesis for us states but the data also show that natural resource abundance is a significant negative determinant of growth we find that natural resource abundance decreases investment schooling openness and r d expenditure and increases corruption and we show that these effects can fully explain the negative effect of natural resource abundance on growth

holding excess capacity to deter entry in a labour managed industry this paper considers the dixit model of entry deterrence and adapts it to the case in which firms are maximizing surplus per worker rather than profits the properties of this model are analogous but not identical to those of the dixit model of particular interest is the possibility that the best response functi ons may be positively sloped even though demand satisfies that a firm s marginal revenue is decreasing in rival firms output this possibil ity implies the existence of perfect equilibria in which the incumbent holds excess capacity which is not possible in the dixit model give n the above condition

the role of multiple potential entrants sequential entry in noncooperative entry deterrence a number of authors have recently considered whether the free rider problem is exhibited in models characterized by multiple potential entrants sequential entry bernheim 1984 and eaton and ware 1987 find that the free rider problem is not an important factor while mclean and riordan 1989 find that it is in this article i identify a general property whose presence is important for whether a model of noncooperative entry deterrence exhibits a free rider problem and in this way help clarify why the above mentioned authors reach these diverse conclusions the article also demonstrates that quite plausible changes in the specifications of both bernheim and eaton and ware lead to incumbent firms underinvesting in entry deterrence

the cost function given imperfectly flexible capital abstract the properties of the firm s cost function are examined when investment is irreversible and there are costs of capital adjustment the effects of the firm s initial capital stock on total marginal and average costs are analysed

dynamic price competition with capacity constraints and a strategic buyer we analyze a simple dynamic durable good model two incumbent sellers and potential entrants choose their capacities at the start of the game we solve for equilibrium capacity choices and the necessarily mixed pricing strategies in equilibrium the buyer splits the order with positive probability to preserve competition making it possible that a high and low price seller both have sales sellers command a rent above the value of unmet demand by the other seller a buyer benefits from either a commitment not to make future purchases or by hiring an agent to always buy from the lowest priced seller

entry barriers and economic welfare the relationship between economic welfare and the number of firms in a quasi cournot market is examined in the first place we presuppose the existence of a strong first best government that can enforce the marginal cost principle to the firms along with regulating the number of firms it is shown that there exist excessive number of firms at the free entry quasicournot equilibrium vis a vis the first best welfare maximizing number of firms the thrust of this result essentially survives even if we replace a utopian first best government by a secondbest government that leaves the firms to pursue their respective profit maximization freely and engages solely in regulating the number of firms it can be shown that the excess entry prevails again in this second best world recent studies in the theoretical industrial organization literature have uncovered several instances which cast serious doubt on the reasonableness of a widespread belief that increasing competition will increase welfare stiglitz 1981 p 184 it has been shown that there are cases which are not altogether unreasonable where social welfare will be increased by strengthening rather than weakening the protection of incumbent firms from the threat of potential entry this is in sharp contrast with the traditional belief 2 what is not known however is how robust these pathologies in fact are we intend to settle this problem by proving two excess entry theorems in the quasi cournot parametric conjectural variations homogeneous oligopoly model seade 1980a b in the first place we presuppose the existence of a strong first best government that could costlessly enforce the marginal cost pricing principle by firms in an oligopolistic market and regulate entry in pursuit of first best social welfare optimization it is shown that the number of firms at the free entry equilibrium exceeds the first best welfare optimizing number of firms the result has already been noted by von weizsacker 1980a b and others in terms of numerical examples our theorem 1 asserts that this phenomenon always holds true for the family of quasi cournot models at hand an implication of this result is that the existence of entry barriers which protect incumbent firms from potential competitors is not necessarily welfare decreasing in sharp contrast with the traditional belief a problem remains with theorem 1 however in that an omnipotent first best government does not exist in reality and the first best ideal is unrealizable in the actual economy therefore even if the intervention by a first best government with a view to restricting the number of firms within an industry may be welfare improving it does

enterprise investment local government intervention and coal overcapacity the case of china abstract long term management of china s coal overcapacity depends on the targeted policy guidance on industry production capacity expansion in the overcapacity formation process in this study coal enterprise and local government are treated as game participants and a three stage dynamic game model has been developed to depict the boosting effect of the game behavior of coal enterprise s and local government s capacity investments in different markets of supply and demand the results are shown in the following 1 local government has been the behind the scenes operator of over investment and redundant construction and its excessive interventions in coal industry investment have been the primary cause of overcapacity formation 2 when the market is in short supply coal enterprise s optimal behavior is to continuously increase the rate of investment growth until it reaches the threshold to obtain the maximum excess profits ultimately leading to overinvestment in the industry and 3 the key factors affecting the game abilities of coal enterprise and local government are the market s self regulation and the central government s supervision intensity although the chinese government a highly vertically oriented bureaucratic structure is implementing a mandatory de capacity policy to alleviate the intensity of excessive coal capacity it is not a long term regularization on the supply side reform

strategic entry deterrence recent developments in the economics of industry this paper reviews the recent developments in the economics of industry with respect to strategic entry deterrence starting from bain s 1956 classical analysis a simple two stage game between an incumbent firm and a potential entrant is used to present the general structure of the entry deterrence problem commitments credible threat and sub game perfection are illustrated in this context the various strategic variables that an incumbent firm can use to bar entry are discussed the issue of whether a group of incumbents can noncooperatively deter entry is taken up and some empirical evidence is reviewed copyright 1989 by blackwell publishers ltd

the impact of vintage and survival on productivity evidence from cohorts of u s manufacturing plants this paper examines the evolution of productivity in u s manufacturing plants from 1963 to 1992 we define a vintage effect as the change in productivity of recent cohorts of new plants relative to earlier cohorts of new plants and a survival effect as the change in productivity of a particular cohort of surviving plants as it ages both factors contribute to industry productivity growth but play offsetting roles in determining a cohort s relative position in the productivity distribution recent cohorts enter with higher productivity than earlier entrants did whereas surviving cohorts show productivity increases as they age these two effects roughly offset each other however so there is a rough convergence in productivity across cohorts in 1992 and 1987

strategic learning and entry equilibrium abstract this paper describes the nature of equilibrium for a dynamic game between a monopolist and an entrant who adopts a learning strategy for cost reduction the learning process is characterized as a continuous time poisson process where each success reduces a part of the entrant s cost difference with the incumbent the entrant chooses a stream of expenditure after every success to control the instant probability of the next success the techniques of semi markov decision processes are used to characterize equilibrium learning decisions at every stage distribution of entry times and the effects of subsidies technical progress etc on pre entry and post entry learning strategies

the resource curse exorcised evidence from a panel of countries abstract this paper evaluates the impact of major natural resource discoveries since 1950 on gdp per capita using panel fixed effects estimation and resource discoveries in countries that were not previously resource rich as a plausibly exogenous source of variation i find a positive effect on gdp per capita levels following resource exploitation that persists in the long term results vary significantly between oecd and non oecd treatment countries with effects concentrated within the non oecd group i further test gdp effects with synthetic control analysis on each individual treated country yielding results consistent with the average effects found with the fixed effects model

scale economies and existence of sustainable monopoly prices abstract the size of the firm relative to market demand is crucial to a determination of whether there exist sustainable monopoly prices in the one product case the size of the firm is its minimum efficient scale in the multiproduct case size is defined by a set of outputs at which cost complementarities are present the analysis shows that when the size of the firm is sufficiently large there exist anonymously equitable aumann shapley prices further at these prices natural monopoly is sustainable against rival entry the aumann shapley price are also shown to be quantity sustainable in the sense of brock and scheinkman

sunk capacity costs long run fixed costs and entry deterrence under complete and incomplete information this article considers a three stage extensive form game where capacity once installed is sunk but where fixed costs are not sunk we show that there may be multiple perfect equilibria of the complete information game when the entrant is incompletely informed about the incumbent s cost the entrant may use the incumbent s capacity choice as a signal of the incumbent s cost we present an example where the incumbent prefers a noninformative capacity signal since this has the effect of reducing the scale of entry we present a second example where the entrant is incompletely informed because the incumbent makes a choice over production technologies that is unobservable to the entrant

oil curse and finance growth nexus in malaysia the role of investment abstract we empirically examine the existence of an oil curse in the finance growth nexus in malaysia we provide new insights into the oil curse phenomenon in malaysia that challenges the conventional argument that malaysia is a counter example of an oil curse country we do not find any significant evidence of direct effects of financial development on tfp however there are direct and positive effects on the level of investment due to financial development and oil dependence while we do not find statistical evidence of a direct negative impact of oil rent on economic growth our results reveal that the symptoms of an oil curse exist specifically we find that oil rent has a weak indirect impact on the finance growth nexus through the quantitative channel or investment quantity the policy implications of our findings are that the financial sector should be more involved in productive investment activities that can strengthen its role in economic growth and that policymakers should reduce dependence on oil and promote economic diversification

excess capacity and limit pricing an empirical test entry may be inhibited by expectations that incumbents have lower marginal costs incumbents may be able to use limit pricing or excess capacity to further this expectation we construct an empirical model of oligopoly capacity and pricing decisions and of entrant responses the results support the hypothesis that both lower prices and greater excess capacity inhibit entry they further support limit pricing but provide no evidence that oligopolies deliberately install excess capacity to deter entry the results suggest however that limit pricing firms may exploit the entry inhibiting effects of unintended excess capacity by raising their limit prices

holding idle capacity to deter entry in this journal dixit i980 carefully analysed the extent to which an established firm facing a prospective entrant might make an investment in capacity beyond that which is optimal for its pre entry output in his model both the established firm and prospective entrants understand that a quantity setting nash equilibrium would be established in any post entry game dixit showed that spence i977 had studied an imperfect equilibrium that is an equilibrium that depended upon a threat that was not credible to obtain his result that firms might hold excess capacity to deter entry in a perfect equilibrium a firm would not wish to install capacity that would be left idle if entry did not occur dixit s conclusion however depends on his assumption that each firm s marginal revenue is always decreasing in the other s output this is quite a restrictive assumption for example it is never satisfied in the relevant range for economists second favourite demand curve constant elasticity demand the basic point is unchanged if the firms anticipate price competition with differentiated products rather thanquantity competition in any post entry game under quite plausible conditions rational firms facing rational potential entrants may install capacity that will certainly be left idle we are thus able to rehabilitate spence s original proposition in a perfect equilibrium setting

capacity output and sequential entry two crucial assumptions frequently made in industrial organization are that an established firm deters entry either by a constant high output the sylos postulate or by high excess capacity the excess capacity hypothesis these assumptions may be an accurate description of the observed conduct of firms in some industries however when the rules of the post entry game are clearly specified the optimal output and investment strategies of an established firm may depart considerably from these behavioral assumptions because of this possible inconsistency with rational behavior any conclusions about the formation of industry based upon either assumption are highly suspect what is more these assumptions avoid the main issue of whether entry deterrence is worthwhile at all this paper presents a dynamic model of entry in which established firms pursue a cournot nash alternatively stackelberg strategy toward a potential entrant the entrant behaves in cournot nash fashion and chooses output on the basis of expected postentry profits at the equilibrium of the post entry game within this framework a constant output entry deterring strategy would involve maintenance of an entry deterring output level before and after entry is threatened an excess capacity entry deterring strategy would involve holding excess capacity at an entry deterring level and increasing output to that level after entry is threatened special conditions are presented under which the sylos postulate or the excess capacity hypothesis will accurately describe optimal entry deterring strategies in addition special conditions are examined under which the established firm maintains a constant output or holds pre entry excess capacity when large scale entry does in fact take place the analysis shows that in general established firm reactions to entry are quite different from these special cases the sylos postulate see joseph bain paolo sylos labini franco modigliani 1958 asserts not only that potential entrants expect established firms to maintain their output constant as entry occurs but that established firms keep output constant at a level that deters entry whether or not it is profitable to do so hailed as a welcome major breakthrough on the oligopoly front modigliani 1958 the sylos postulate underlies many papers in the large theoretical and empirical literature on limit pricing yet the sylos postulate ignores both the strategic interaction between firms and the dynamic aspects of entry 2 unless the established firm s monopoly output exceeds the entrydeterring level the established firm with a general cost function able to choose an entry deterring output level will instead always desire a lower output level before entry for the special case where capacity is an upper bound on output and the established firm is a stackelberg leader in the post entry game

does the european natural gas market pass the competitive benchmark of the theory of storage indirect tests for three major trading points this paper presents the first comparative analysis of the relationship between natural gas storage utilization and price patterns at three major european trading points using two indirect tests developed by fama and french 1987 1988 that are applied in other commodity markets we impose the no arbitrage condition to model the efficiency of the natural gas market the results reveal that while operators of european storage facilities realize seasonal arbitrage profits substantial arbitrage potentials remain we suggest that the indirect approach is well suited to provide market insights for periods with limited data we find that overall market performance differs substantially from the competitive benchmark of the theory of storage

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

competition through capacity investment under asymmetric existing capacities and costs this paper discusses the way that different operational characteristics including existing capacity scale economies and production policy have an important influence on the capacity outcomes when firms compete in the market place we formulate a game theoretical model where each firm has an existing capacity and faces both fixed and variable costs in purchasing additional capacity specifically the firms simultaneously or sequentially make their expansion decisions and then simultaneously decide their production decisions with these outputs being capacity constrained we also compare our results with cases where production has to match capacity by characterizing the firms capacity and production choices in equilibrium our analysis shows that the operational factors play a crucial role in determining what happens the modeling and analysis in the paper gives insight into the way that the ability to use less production capacity than has been built will undermine the commitment value of existing capacity if a commitment to full production is not possible sinking operational costs can enable a firm to keep some preemptive advantage we also show that the existence of fixed costs can introduce cases where there are either no pure strategy equilibrium or multiple equilibria the managerial implications of our analysis are noted in the discussion our central contribution in this paper is the innovative integration of the strategic analysis of capacity expansion and well known s s policy in operations and supply chain theory

minerals institutions openness and growth an empirical analysis competing explanations of the resource curse are tested using panel data the data support the existence of a mineral resource curse for developing countries with weak institutions consistent with the hypothesis that owners of mineral resources use weak institutions and openness to trade to stifle the development of human capital to the detriment of growth in other sectors of the economy manufacturing imports substitute for the development of domestic production so openness to trade correlates with lower growth in mineral dependent economies the dutch disease and debt overhang explanations of the resource curse are not supported

industrial policy reform in six large newly industrializing countries the resource curse thesis abstract all six large newly industrializing countries nics in this study favored an autarkic industrial policy aip in the 1950s aip required however the rapid build up of heavy and chemical industry hci which caused foreign exchange shortages if the hci matured slowly this is because the import and subsidy demands of the growing protected hci sector became too burdensome for the competitive primary sector whose rents shrank in relative importance as the economic structure evolved the two least well endowed nics abandoned aip early in favor of a competitive industrial policy cip which relied on labor intensive exports to earn foreign exchange and resulted in rapid economic growth in contrast the resource bonus of the four best endowed nics sustained aip longer but the longer aip lasted the harder it became to reform and the slow maturing hci sector adversely affected economic growth in this way the resource bonus became a curse rather than a blessing

how do mineral states learn path dependence networks and policy change in the development of economic institutions summary based on case study methods i draw lessons from the political economy of macroeconomic management in chile and peru to explain how mineral states learn to think long term and eventually escape the resource curse i give an institutionalist account of the rise of countercyclical funds showing how the long term development of elite networks qualifies the contemporary making of curse escapes policy networks compose one central avenue of institutional development for both the reproduction of path dependence and the making of institutional change the exposition challenges political economy of development frameworks which over emphasize structural initial conditions and assume steady rent seeking behavior of state agents

social desirability of free entry a bilateral oligopoly analysis abstract this paper explores the social desirability of free entry by analyzing a bilateral oligopoly model with bargaining that incorporates the entry process of firms we demonstrate that free entry in an industry producing a homogeneous final product leads to a socially insufficient number of firms when the suppliers of the intermediate products have sufficiently strong bargaining power this is in contrast to previous findings in the theoretical industrial organization literature which demonstrate that in homogeneous final product markets with cournot oligopoly and fixed set up costs level of entry in the free entry equilibrium is always socially excessive our analysis yields an important policy implication given that the standard excess entry result has often been used as a justification for apparently anti competitive entry regulations

enterprise breakups and performance during the transition from plan to market using firm level data we estimate the effects of the major wave of 1991 breakups of czechoslovak state owned enterprises on the subsequent performance of the master enterprises and spun off divisions we estimate the performance effects of spinoffs by comparing the performance of enterprises that remained intact throughout the 1990 1992 period to the performance of the master enterprises that experienced spinoffs and the newly spun off subsidiaries our estimates suggest that the breakups had a significant immediate effect on the productive efficiency and on the profitability of industrial firms in 1991 and that the effect became much less significant in 1992 the effect is a negative function of the size of the spinoff being positive for small to slightly above average sized spinoffs and negative for very large ones we cannot reject the hypothesis that the estimated effect was identical for the spun off subsidiaries and the master enterprises that experienced the spinoffs our 1991 estimates sugges

the resource curse what have we learned from two decades of intensive research introduction to the special issue there has been increasing interest in the so called resource curse that is the tendency of resource rich countries to underperform in several development outcomes this has generated a mountain of often contradictory evidence leaving many floundering in the flood of information this special issue compiles eight papers from some of the most prominent contributors to this literature combining original research with critical reflection on the current stock of knowledge the studies collectively emphasise the complexities and conditionalities of the curse its presence intensity is largely context specific depending on the type of resources socio political institutions and linkages with the rest of the economy

energy governance transnational rules and the resource curse exploring the effectiveness of the extractive industries transparency initiative eiti transnational standards for disclosure have become a defining feature of global governance and sound economic development yet little is known about their effectiveness this study statistically explores the efficacy of such standards for the important case of the extractive industries transparency initiative eiti an international non governmental organization which maintains a voluntary standard for revenue transparency in the extractive industries as of november 2015 31 countries were eiti compliant and another 49 were eiti candidates in total 49 countries had disclosed payments and revenues worth some 1 67 trillion in more than 200 eiti reports and over 90 major companies involved in oil gas and mining are committed to supporting the eiti the eiti has also received support from 84 global investment institutions that collectively manage about 16 trillion in energy infrastructural assets moreover the european union african union g8 and g20 and the united nations have all endorsed the eiti this article provides the first broad empirical examination of the eiti s effectiveness in improving governance and economic development outcomes in its member countries using non parametric tests regression analysis and data from the world bank we analyze the performance of the first 16 countries to attain eiti compliance status over the period of 1996 2014 we find interestingly that in most metrics eiti countries do not perform better during eiti compliance than before it and that they do not outperform other countries we postulate four possible explanations behind the relative weakness of the eiti a limited mandate its voluntary nature stakeholder resistance and dependence on strong civil society

on comprehensive wealth institutional quality and sustainable development quantifying the effect of institutional quality on sustainability abstract this paper shows a significant and causal positive relationship between good institutions and sustainability while sustainability is measured with the adjusted net saving ans indicator institutional quality is measured using an average of six dimensions of governance an instrumental variable is used to account for endogeneity rearranging the set up and running the regression on the net national savings rate lead to results displaying a much smaller and weaker effect this finding suggests that compared to the saving of physical capital the saving of non physical capital is influenced more strongly by institutional quality

economic freedom and productivity growth in resource rich economies summary the focus of this paper is to test whether free market institutions that protect property rights and support freedom of choice and voluntary exchange can change the curse of natural resources into a blessing to examine the above question this paper uses the fraser institute s economic freedom index and its five sub indices namely government size property rights access to sound money freedom to trade and setting proper regulations using data from 99 sample countries over the period 1970 2010 the system gmm estimates suggest that the negative growth effects of resource rents may turn positive in countries with greater economic freedom

corruption and the political economy of resource based development a comparison of asia and sub saharan africa we model how the supply and demand for bribes affects resource use by an economy and the reinvestment of resource rents in other assets this requires adjusting the world bank s measure adjusted net savings for any rent dissipation due to corruption the impacts of corruption on long run changes and periodic growth in the adjusted net savings rate are estimated across african and asian economies from 1970 to 2003 corruption rather than resource dependency per se affects negatively the ability of african countries to reinvest resource rents in the short term but for asian countries corruption is less important than point resources corruption influences long run growth in adjusted net savings rates in all countries and is also the pathway through which this growth is affected by patterns of resource use trade and abundance

capacity precommitment as an entry barrier for price setting firms abstract for a bertrand edgeworth framework this paper considers whether investmentin capacity may serve as a barrier to entry when firms are identical except for the first mover precommitment possibilities that the incumbent enjoys subgame perfect nash equilibria are examined for a three stage non cooperative game in which the incumbent sets a capacity level the potential entrant chooses its capacity and then firms set prices using mixed strategies for some parameter values entry is blockaded positive profits for the entrant are precluded for other parameter values the incumbent may increase its capacity to prevent entry and maintain non negative profits

cursing the blessings natural resource abundance institutions and economic growth summary since sachs and warner s sachs j d warner a m 1995a natural resource abundance and economic growth nber working paper no 5398 contribution there has been a lively debate on the so called natural resource curse this paper re examines the effects of natural resource abundance on economic growth using new measures of resource endowment and considering the role of institutional quality we find a positive direct empirical relationship between natural resource abundance and economic growth in both ols and 2sls regressions the positive resource effects are particularly strong for subsoil wealth our results also show no evidence of negative indirect effects of natural resources through the institutional channel

industry structure with sequential technology choice abstract noncooperative entry deterrence arises in a market where firms enter sequentially and irreversibly choose a technology in the case of delegated entry deterrence the earliest firms enter with a normal technology and pass on entry deterrence responsibilities to subsequent entrants in the case of partial entry deterrence the earlliest firms choose an inferior technology that allows some but not full entry of later firms with a normal technology in both cases entry is deterred in that the equilibrium number of firms is smaller than would prevail if all firms were to choose a normal technology

capacity and entry under demand uncertainty this paper examines the decision to enter into a sector dominated by a monopoly if demand is random at entry time given a two period world the monopolist enters initially and enjoys an uncontested monopoly for one period while the entrant may enter and compete during the second period demand is random one period earlier and independently distributed in both periods and enitry corresponds to an irreversible capacity choice made under certain deimand all other production decisions take place after demand has been revealed risk neutrality is assumed on both sides if entry occurs then there is a cournot duopoly in the second period it is shown that concurrently with this cournot production game there is a separate stackelbergtype game with capacities as decision variables entry deterrence conditions are derived under general demand and cost assumptions it is shown that demand uncertainty changes several of the results of similar certain demand models