renegotiations in the greenhouse international climate policies are being shaped in a process of ongoing negotiations this paper develops a sequential game framework to explore the stability of international climate agreements allowing for multiple renegotiations we analyse how the incentives to reach an international climate agreement in the first period will be impacted by the prospect of further negotiations in later periods and by the punishment options related to renegotiations for this purpose we introduce a dynamic model of coalition formation with twelve world regions that captures the key features of the climate economy impacts of greenhouse gas emissions for a model with one round of renegotiations we find that a coalition of china and the united states is the unique renegotiation proof equilibrium in a game with more frequent renegotiations we find that the possibility to punish defecting players helps to stabilise larger coalitions in early stages of the game consequently several renegotiation proof equilibria emerge that outperform the coalition of china and usa in terms of abatement levels and global payoff the grand coalition however is unstable

network models and financial stability abstract systemic risk is a key concern for central banks charged with safeguarding overall financial stability in this paper we investigate how systemic risk is affected by the structure of the financial system we construct banking systems that are composed of a number of banks that are connected by interbank linkages we then vary the key parameters that define the structure of the financial system including its level of capitalisation the degree to which banks are connected the size of interbank exposures and the degree of concentration of the system and analyse the influence of these parameters on the likelihood of knock on defaults first we find that the better capitalised banks are the more resilient is the banking system against contagious defaults and this effect is non linear second the effect of the degree of connectivity is non monotonic i e initially a small increase in connectivity increases the contagion effect but after a certain threshold value connectivity improves the ability of a banking system to absorb shocks third the size of interbank liabilities tends to increase the risk of knock on default even if banks hold capital against such exposures fourth more concentrated banking systems are shown to be prone to larger systemic risk all else equal in an extension to the main analysis we study how liquidity effects interact with banking structure to produce a greater chance of systemic breakdown we finally consider how the risk of contagion might depend on the degree of asymmetry tiering inherent in the structure of the banking system a number of our results have important implications for public policy which this paper also draws out

dynamic pricing of perishable assets under competition we study dynamic price competition in an oligopolistic market with a mix of substitutable and complementary perishable assets each firm has a fixed initial stock of items and competes in setting prices to sell them over a finite sales horizon customers sequentially arrive at the market make a purchase choice and then leave immediately with some likelihood of no purchase the purchase likelihood depends on the time of purchase product attributes and current prices the demand structure includes time variant linear and multinomial logit demand models as special cases assuming deterministic customer arrival rates we show that any equilibrium strategy has a simple structure involving a finite set of shadow prices measuring capacity externalities that firms exert on each other equilibrium prices can be solved from a one shot price competition game under the current time demand structure taking into account capacity externalities through the time invariant shadow prices the former reflects the transient demand side at every moment and the latter captures the aggregate supply constraints over the sales horizon this simple structure sheds light on dynamic revenue management problems under competition which helps capture the essence of the problems under demand uncertainty we show that the equilibrium solutions from the deterministic game provide precommitted and contingent heuristic policies that are asymptotic equilibria for its stochastic counterpart when demand and supply are sufficiently large this paper was accepted by yossi aviv operations management

product introduction decisions in a duopoly abstract in this paper we model a dynamic environment with two firms that fight for share of industry sales and profit in a market with constant size they capture share by repeatedly introducing new products price changes from period to period reflecting each firm s learning we formulate the problem as a repeated game where each player s decision at each period is to introduce a new product we find that in general each firm s frequency of product introductions clockspeed in equilibrium decreases as its fixed product introduction cost increases further we find that a higher rate of manufacturing learning results in a higher clockspeed and in a higher market share and also results in significantly worse profits for the competitor the results underscore the importance of manufacturing expertise in a firm s ability to introduce new products

the biodiversity supergame this paper considers the ability of developed countries to sustain a cooperative agreement to compensate developing countries for the incremental costs of biodiversity conservation it is shown that depending on certain parameter values and the model specification such an agreement could only codify the non cooperative outcome or achieve the full cooperative outcome where global net benefits are maximized however where the agreement can sustain the full cooperative outcome net benefits will be only slightly larger than in the noncooperative outcome

estimating the reduction in labor hours due to a new technology under uncertain demand abstract when investing in a new machine one must estimate the reduced labor costs in the past this was usually done in a deterministic way assuming that we have accurate point estimation of demand rates and the reduction in labor costs is proportional to the reduction in labor hours however if demand rates of products are known probabilistically the expected reduction in labor hours follows a probability distribution this distribution not just the mean value is important because 1 it shows the effect of the uncertainty in demand on estimating the reduction in labor hours and 2 it allows better estimation of labor cost savings when labor costs are not proportional to labor hours using the distribution of product demand rates this paper presents a procedure for estimating the distribution of reduction in labor hours obtained from a new machine

dynamic game results of the acquisition of new technology open and closed loop nash strategies are derived and analyzed for a differential game in which two competing firms choose prices and productive capacity where new technology reduces a firm s unit operating cost using an open loop strategy a firm makes an irreversible commitment to a future course of action for example a contract with a labor union may force a firm to commit to maintaining its entire workforce regardless of its competitor s future realized behavior in contrast using a closed loop strategy a firm s decisions evolve over time continuously responding to the competitor s behavior the dynamic nash strategies obtained for the closed loop model exhibit a more restricted acquisition of new technology and a greater reduction of existing capacity relative to the open loop solutions in addition the dynamic nash price to be charged for output is higher in the closed as opposed to open loop competitive environment numerical solutions are presented to demonstrate that if both firms apply the closed loop approach each will earn higher profits than if one or both firms choose an open loop strategy

sulfur dioxide control by electric utilities what are the gains from trade title iv of the 1990 clean air act amendments caaa established a market for transferable sulfur dioxide so2 emission allowances among electric utilities this market offers firms facing high marginal abatement costs the opportunity to purchase the right to emit so2 from firms with lower costs and this is expected to yield cost savings compared to a command and control approach to environmental regulation this paper uses econometrically estimated marginal abatement cost functions for power plants affected by title iv of the caaa to evaluate the performance of the so2 allowance market specifically we investigate whether the much heralded fall in the cost of abating so2 compared to original estimates can be attributed to allowance trading we demonstrate that for plants that use low sulfur coal to reduce so2 emissions technical change and the fall in prices of low sulfur coal have lowered marginal abatement cost curves by over 50 percent since 1985 the flexibility to take advantage of these chan

renegotiation proof climate agreements with full participation conditions for pareto efficiency recent contributions show that climate agreements with broad participation can be implemented as weakly renegotiation proof equilibria in simple models of greenhouse gas abatement where each country has a binary choice between cooperating i e abate emissions or defecting no abatement here we show that this result carries over to a model where countries have a continuum of emission choices indeed a pareto efficient climate agreement can always be implemented as a weakly renegotiation proof equilibrium for a sufficiently high discount factor this means that one need not trade off a narrow but deep treaty with a broad but shallow treaty

a differential games solution to a model of competition between a thief and the police this paper contains an extension of an optimal control model considered by sethi sethi s p 1979 optimal pilfenng policies for dynamic continuous thieves management sci 25 6 june 535 542 to a differential game situation it is assumed that sethi s concave thief i e a risk averter plays against the police whose objective function incorporates convex costs of law enforcement a one shot utility at the time of arrest and a continuous utility or cost rate after the thief is arrested the probability that the thief is caught by time t is influenced not only by the pilfering rate as is the case in sethi s model but also by the instrumental variable of the police namely its rate of law enforcement our aim is to analyze noncooperative nash solutions of the differential game sketched above due to the special structure of the hamiltonians a system of two nonlinear differential equations for the control variables of both players can be derived the system is solved explicitly under special assumptions it is shown that the optimal rate of law enforcement of police increases monotonically whereas for the nash optimal pilfering rate three cases may be characterized in which increase decrease or constancy occur thus the nash optimal solutions show in each case monotonic behavior i e changes in trend never occur moreover the dependency of the terminal values of control can be described finally an interpretation of the model as market entrance game is sketched

technology acquisition with technological progress effects of expectations rivalry and uncertainty abstract we study the effect of expectations regarding technological progress on a firm s technology adoption decision in a duopoly new generation technologies become available one in each period with successive generations representing better and better performance a game theoretic framework is used involving two identical firms competing in the same market over two periods it is shown that expectations retard adoption of the first period technology it is also shown that an asymmetric equilibrium results in higher social welfare and that more investment does not necessarily mean higher levels of welfare uncertainty is shown to have either no effect or a negative effect on the adoption of the current technology when nash equilibrium holds however when subgame perfect equilibrium holds uncertainty has a more complicated effect and numerical examples show that it may even encourage the adoption of the current technology relative to the deterministic equilibrium

monitoring vulnerability and impact diffusion in financial networks abstract in this paper we propose novel risk related network measurements to identify the roles that financial institutions play as potential targets or sources of contagion we derive theoretical properties and provide a clear systemic risk interpretation for the proposed measures devised upon the notion of communicability in networks we introduce the impact susceptibility index which indicates whether market participants are locally or remotely vulnerable we show how this index can be used as a financial stability monitoring tool and apply it to analyze the brazilian financial market we find that non banking institutions are potentially remotely vulnerable in certain periods while banking institutions are not susceptible to indirect impacts to address the perspective of market participants as sources of contagion we propose the impact diffusion influence index which captures the potential influence of financial institutions on propagating impacts in the network we unveil the presence of a portion of small medium banking institutions that is consistently more influential than large banks in potentially diffusing impacts throughout the network regarding financial system stability regulators should identify the entities that play these two roles as they can render the system more risky

the nash solution of a maintenance production differential game abstract a simple two person nonzero sum differential game between the maintenance crew of a firm and the production department of the same firm is considered it is assumed that preventive maintenance decelerates the decrease in quality of a machine whereas the production activities set by the firm reduces the quality of the machine due to the special structure of the game a system of two differential equations for the non cooperative nash solution trajectories can be derived this provides a possibility to obtain qualitative insights into the structure of the solution paths by phase diagram methods without solving the necessary optimality conditions explicitly for small salvage values of the machine it is shown that the optimal maintenance expenditures decrease over time whereas the optimal production rate increases monotonically moreover another interpretation of the differential game analyzed is given as a conflict situation between a firm polluting the environment by producing an output and a governmental agency cleaning up the pollution

which bank is the central bank abstract liquidity flows through a financial network cannot be accurately described using external processing constraints alone behavioral aspects of participants also matter a method similar to google s pagerank procedure is used to produce a ranking of participants in the canadian large value transfer system in terms of their daily liquidity holdings accounting for differences in banks processing speeds is essential for explaining why observed distributions of liquidity differ from the initial distributions which are determined by the credit limits selected by banks delay tendencies of banks are unobservable in the data and are estimated using a markov model

the interbank network across the global financial crisis evidence from italy abstract this study examines the effects of the global financial crisis gfc on interbank market connectivity using network analysis more specifically using data on italian banks bilateral interbank positions between 1998 and 2013 we analyze the impact of the following events on each bank s network centrality the liquidity crisis in august 2007 the collapse of lehman brothers in september 2008 eurosystem s long term refinancing operations ltros between 2009 and 2012 the sovereign debt crisis in july 2011 and the announcement of outright monetary transactions omt in 2012 the results show that the 2007 liquidity crisis and especially the collapse of lehman brothers are associated with a marked reduction of the relative interconnectedness of the italian banking sector i e a shift in the distribution of banks centrality to the left away from the most connected bank in the following years the system progressively recovered its initial patterns of integration among banks which coincided with the main eurosystem s monetary policy interventions however the average outcome conceals different results across banks depending on their characteristics and initial positions within the system

estimating bilateral exposures in the german interbank market is there a danger of contagion abstract credit risk associated with interbank lending may lead to domino effects where the failure of one bank results in the failure of other banks not directly affected by the initial shock recent work in economic theory shows that this risk of contagion depends on the precise pattern of interbank linkages we use balance sheet information to estimate a matrix of bilateral credit relationships for the german banking system and test whether the breakdown of a single bank can lead to contagion we find that in the absence of a safety net there is considerable scope for contagion that could affect a large proportion of the banking system the financial safety net in this case institutional guarantees for saving banks and cooperative banks considerably reduces but does not eliminate the danger of contagion even so the failure of a single bank could lead to the breakdown of up to 15 of the banking system in terms of assets

renegotiation proof equilibria in a global emission game when players are impatient in a two country model in which countries differ with respect to the perception of environmental damages and abatement costs the stability of international environmental agreements is analyzed in a dynamic framework three types of agreements are considered a socially optimal solution a uniform emission tax a tax equally applied in both countries and a uniform emission reduction quota an equal percentage emission reduction from a base year stability is checked for these agreements according to the concept of renegotiation proofness it is shown that the stability requirements depend crucially on the parameters defining the interests of the two countries and the type of agreement moreover it is demonstrated that if punishment options are restricted for some reason the stability of an agreement may suffer one important result of the paper is that if countries exhibit asymmetric interests stability in the quota regime is higher than in the tax regime and in the social optimum this might explain why emission reduction quotas have been so popular in international politics despite recommendations of economists to use market based instruments

an empirical study of the mexican banking system s network and its implications for systemic risk abstract with the aim to measure and monitor systemic risk we present some topological metrics for the interbank exposures and the payments system networks the evolution of such networks is analyzed we draw important conclusions from the systemic risk s perspective and propose a measure of interconnectedness additionally we suggest non topological measures to describe individual behavior of banks in both networks the main findings of this paper are the structures of the payments and exposures networks are different in terms of connectivity the topology of the exposures network changed after the collapse of lehman brothers whereas the structure of the payments network does not the proposed measure of interconnectedness can be used to determine the importance of a bank in terms of connectivity finally we found that interconnectedness of a bank is not necessarily related with its assets size but it is linked to the contagion it might cause

the optimal acquisition of automation to enhance the productivity of labor decisions concerning the mix of automation and labor employed by an organization are embedded in the long term strategic plan since the composition of productive capacity impacts on an organization s ability to survive and compete in this paper the optimal mix of automation and labor is identified for automation which acts to enhance the productivity of an organization s workforce the incentives considered for acquiring automation are increasing the level of output reducing the high cost of labor and compensating for a limited supply of labor factors explicitly examined by the model include the future long term goal level of output costs associated with maintaining the workforce wages and automation and costs associated with changing the levels of workforce and automation since the formulation is dynamic so that all exogenous and decision variables may be expressed as functions of time the effects of technological improvement increasing wage rates changing labor supply and diminishing retur

evaluating systemic risk using bank default probabilities in financial networks in this paper we propose a novel methodology to measure systemic risk in networks composed of financial institutions our procedure combines the impact effects obtained from stress measures that rely on feedback centrality properties with the default probabilities of institutions we also present new heuristics for designing feasible and relevant stress testing scenarios that can subside regulators in financial system surveillance tasks we develop a methodology to extract banking communities and show that these communities have a relevant effect on systemic risk we find that these communities are mostly composed of non large banks suggesting that regulators should also broaden their surveillance efforts to these banking communities other than to the usual sifis and large banks finally our results provide insights and guidelines for policymakers

a network analysis of the italian overnight money market the objective of this paper is to analyse the network topology of the italian segment of the european overnight money market through methods of statistical mechanics applied to complex networks we investigate differences in the activities of banks of different sizes and the evolution of their connectivity structure over the maintenance period the main purpose of the analysis is to establish the potential implications of the current institutional arrangements on the stability of the banking system and to assess the efficiency of the interbank market in terms of absence of speculative and preferential trading relationships

coalition proof nash equilibria ii applications abstract in bernheim peleg and whinston coalition proof equilibria i concepts j econ theory 42 1987 1 12 we proposed the notion of coalition proof nash equilibrium and perfectly coalition proof nash equilibrium as solution concepts for strategic environments in which players can freely discuss their strategies but cannot make binding commitments this paper undertakes applications to several economic problems including the behavior of cournot oligopolists oligopolistic entry deterrence cooperation in finite horizon games and social choice rule implementation

regional versus global cooperation for climate control abstract this paper considers whether international environmental public goods provision such as mitigation of climate change is better dealt with through regional cooperation than through a global treaty previous research suggests that at best a global environmental treaty will achieve very little at worst it will fail to enter into force using a simple dynamic game theoretic model with weakly renegotiation proof equilibrium as solution concept we demonstrate that two agreements can sustain a larger number of cooperating parties than a single global treaty the model provides upper and lower bounds on the number of parties under each type of regime it is shown that a regime with two agreements can pareto dominate a regime based on a single global treaty we conclude that regional cooperation might be a good alternative or supplement to global environmental agreements

systemic risk financial contagion and financial fragility abstract although it is hard to arrive at a widely accepted definition for systemic risk it is generally acknowledged that it is the risk of the occurrence of an event that threatens the well functioning of the system of interest financial payments banking etc sometimes to the point of making its operation impossible we model systemic risk with two main components a random shock that weakens one or more financial institutions and a transmission mechanism which transmits and possibly exacerbates such negative effects to the rest of the system our model could be conceptually represented by a network already described in previous works in this work we show how is possible to estimate the distribution of losses for the banking system with our model additionally we show how it is possible to separate the distribution of losses into two components the losses incurred by the initial shock and the losses resulting from the contagion process finally once the distribution is estimated we can derive standard risk measures for the system as a whole another important contribution of this work is that we can follow the evolution of certain risk measures like the expected loss or the cvar in order to evaluate if the system is becoming more or less risky in fact more or less fragile additionally we can decompose the distribution of losses of the whole banking system into the systemic and the contagion elements and we can determine if the system is more prone to experience contagious difficulties during a certain period of time

impacts of trade and the environment on clustered multilateral environmental agreements many countries align their environmental policy and environmental regulation by way of multilateral environmental agreements meas previous work in economics provided insights in the economic and political determinants of meas at large this paper distinguishes meas by the main issues covered and classifies them in five clusters biodiversity atmosphere land chemicals and hazardous wastes and seas then the role of environmental economic and political factors and of dynamic and cross cluster effects is studied at the level of mea clusters two findings stand out from this empirical analysis first economic size and multilateral trade liberalisation of countries are found to be the most important drivers of mea participation across all clusters second adjustment costs turn out to deter and in particular cross cluster spillovers turn out to stimulate mea participation across countries and clusters

eating your own lunch protection through preemption recent discussions of management practices among successful high technology companies suggest that one key strategy for success is to eat your own lunch before someone else does the implication is that in intensely competitive or hypercompetitive markets firms with a leading position should aggressively cannibalize their own current advantages with next generation advantages before competitors step in to steal the market given the pace of technological and other types of change such strategy often requires creating next generation advantages while the current advantages are still profitable that is trading current profits for future market leadership we capture the tradeoff between a market leader s willingness to reap profits with its current set of advantages and its desire to maintain market leadership by investing in the next generation using a competitive model that determines the equilibrium launch time of a next generation advantage we find that in absence of lower launch costs for an

strategic technology choice and capacity investment under demand uncertainty this paper studies the impact of competition on a firm s choice of technology product flexible or product dedicated and capacity investment decisions specifically we model two firms competing with each other in two markets characterized by price dependent and uncertain demand the firms make three decisions in the following sequence choice of technology technology game capacity investment capacity game and production quantities production game the technology and capacity games occur while the demand curve is still uncertain and the production game is postponed until after the demand curve is revealed we develop best response functions for each firm in the technology game and compare how a monopolist and a duopolist respond to a given flexibility premium we show that the firms may respond to competition by adopting a technology which is the same as or different from what the competitor adopts we conclude that contrary to popular belief flexibility is not always the best response to competition flexible and dedicated technologies may coexist in equilibrium we demonstrate that as the difference between the two market sizes increases a duopolist is willing to pay less for flexible technology whereas the decision of a monopolist is not affected further we find that a firm that invests in flexibility benefits from a low correlation between demands for two products but the extent of this benefit differs depending on the competitor s technology choice our results indicate that higher demand substitution may or may not promote the adoption of flexibility under competition whereas it always facilitates the adoption of flexibility without competition finally we show that contrary to intuition as the competitor s cost of capacity increases the premium a flexible firm is willing to pay for flexibility decreases

the oslo protocol on sulfur reduction the great leap forward the increasing number of international environmental agreements ieas and the fact that under some agreements emissions have been reduced beyond agreed targets are frequently viewed as success stories of international cooperation we argue that success can only be measured if abatement targets under an iea are compared with estimated abatement levels in the absence of a treaty and are evaluated in terms of costs and benefits we analyze the oslo protocol on sulfur reduction showing that this iea is not the great leap forward when compared with the calculated nash equilibrium and the social optimum however we also demonstrate that under the oslo protocol more ambitious targets could not have been realized due to strong free rider incentives

estimating strategic models of international treaty formation this article develops an empirical framework for analysing the timing of international treaties a treaty is modelled as a dynamic game among governments that decide on participation in every period the net benefit of treaty membership increases over time spillovers among members and non members accelerate or delay treaty formation by transforming participation into a strategic complement or substitute respectively the predictions of the model inform the estimation of the structural parameters based on a cross section of treaty ratification dates with this approach i estimate the sign and magnitude of strategic interaction in the ratification of the montreal protocol in the formation of europe s preferential trade agreements and in the growth of germany s network of bilateral investment treaties through a series of counterfactual experiments i explore different mechanisms that give rise to strategic interaction in the formation of these treaties

interbank contagion an agent based model approach to endogenously formed networks abstract the potential impact of interconnected financial institutions on interbank financial systems is a financial stability concern for central banks and regulators in examining how financial shocks propagate through contagion effects we argue that endogenous individual bank choices are necessary to properly consider how losses develop as the interbank lending network evolves we present an agent based model to endogenously reconstruct interbank networks based on 6600 banks decision rules and behaviors reflected in quarterly balance sheets we compare the results of our model to the results of a traditional stationary network framework for contagion the model formulation reproduces dynamics similar to those of the 2007 09 financial crisis and shows how bank losses and failures arise from network contagion and lending market illiquidity when calibrated to post crisis data from 2011 to 2014 the model shows the u s banking system has reduced its likelihood of bank failures through network contagion and illiquidity given a similar stress scenario

capacity investment preemption and commitment in an infinite horizon model the commitment value of capacity is analyzed in an infinite horizon duopoly model the paper focuses on the role of alternative behavioral assumptions about the ability of firms to commit to investment paths each firm s investment strategy in a feedback nash equilibrium is shown to be a decreasing function of its rival s current capacity this creates an incentive for a firm to expand its capacity to preempt subsequent rival investment in a precommitment equilibrium there are no incentives to invest preemptively as a consequence steady state capacity levels are greater in a feedback nash equilibrium than in a precommitment equilibrium copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

on the diffusion of new technology a game theoretic approach this paper is an attempt at a rigorous albeit not exceedingly general analysis of the diffusion of new technology in particular consider an industry composed of two firms each using the current best practice technology the firms are assumed to be operating at nash equilibrium output levels generating a market price given demand and profit allocations when a cost reducing innovation is announced each firm must determine when if ever to adopt it based in part upon the discounted cost of implementing the new technology and in part upon the behavior of the rival firm if either firm adopts before the other it can expect to make substantial profits at the expense of the other firm on the other hand the discounted sum of purchase price and adjustment costs may decline with the lengthening of the adjustment period as various quasi fixed factors become more easily variable therefore although waiting costs the firm more in terms of foregone profits it may save money on the cost of purchasing the new technology thus the firm must weigh the costs and benefits of delaying adoption as well as take account of its rival s strategic behavior

strategic investment in technological innovations abstract the aim of this paper is to determine the optimal timing of technology investment of a single firm in a duopoly framework as time passes different technologies are invented which after sometime become available for the firm to adopt the question here is not only when a firm should invest but also which technology should be adopted for different scenarios the optimal technology investment decision is determined outcomes range from pre emption equilibria to equilibria with second mover advantages

simultaneous and dynamic price production inventory and capacity decisions abstract this paper concerns a profit maximizing firm that derives the optimal price for its output level of output level of inventory and composition of productive capacity over time first it is assumed that capacity may be acquired to either increase or replace the firm s existing productive capacity second it is assumed that the acquisition of new capacity causes a reduction in the firm s production cost lastly it is assumed that demand which is expressed as a function of time and price must be met either from current production or from inventory clearly the level of production cannot exceed the productive capacity at any time the optimal control model formulated requires the solution of a two point boundary value problem so that a discrete approximation numerical procedure is presented numerical results indicate that due to anticipated technological improvement the acquisition of new capacity is postponed and occurs in greater magnitude later in the planning horizon in addition as a result of upgrading productive capacity through the acquisition of new technology numerical results show that a firm lowers its per unit production cost and thereby reduces the optimal price charged for output which increases demand furthermore since the level of capacity is increased due to the purchase of new technology less reliance on inventory is necessary to meet peak demand lastly it is shown that a larger firm optimally acquires a greater level of new capacity over the planning horizon to reduce its operating costs and thereby further its competitive advantage

systemic risk in the angolan interbank payment system a network approach in this work we analyse the topology of the network of interbank payment flows settled via the real time gross settlement system rtgs of the angolan payment system aps during the fourth quarte

the formation of a core periphery structure in heterogeneous financial networks recent empirical evidence suggests that nancial networks exhibit a core periphery network structure this paper aims at giving an economic explanation for the emergence of such a structure using network formation theory focusing on intermediation benets we nd that a core periphery network cannot be unilaterally stable when agents are homogeneous the best response dynamics converge to a unique unilaterally stable outcome ranging from an empty to denser networks as the costs of linking decrease a core periphery network structure can form endogenously however if we allow for heterogeneity among agents in size we show that our model can reproduce the observed core periphery structure in the dutch interbank market for reasonable parameter values

networked relationships in the e mid interbank market a trading model with memory interbank markets are fundamental for bank liquidity management in this paper we introduce a model of interbank trading with memory our model reproduces features of preferential trading patterns in the e mid market recently empirically observed through the method of statistically validated networks the memory mechanism is used to introduce a proxy of trust in the model the key idea is that a lender having lent many times to a borrower in the past is more likely to lend to that borrower again in the future than to other borrowers with which the lender has never or has in frequently interacted the core of the model depends on only one parameter representing the initial attractiveness of all the banks as borrowers model outcomes and real data are compared through a variety of measures that describe the structure and properties of trading networks including number of statistically validated links bidirectional links and 3 motifs refinements of the pairing method are also proposed in order to capture finite memory and reciprocity in the model the model is implemented within the mason framework in java

oligopoly models for optimal advertising when production costs obey a learning curve business policy questions frequently involve competitive encounters among several different firms oligopoly theory in economics was devised to answer similar questions but its results so far are largely confined to cases of monopoly one firm duopoly two firms and many firms wheat farmers the cases with n firms where 3 n 10 are of great interest to business policy but are rarely treated in the economics literature because of their extreme difficulty the natural mathematical model for studying such questions is the theory of differential games originally devised by r isaacs isaacs r 1975 differential games robert e krieger publishing co huntington new york originally published by john wiley sons new york 1965 for pursuer evader games later it was extended by j case case j h 1979 economics and the competitive process new york university press new york to nonzero sum differential games for application to questions of economic competition the problem of characterizing an optimal advertising policy over time is an important question in the field of marketing it is especially important during the period of the introduction of a new product and it is also during this time that the production learning curve phenomenon is most pronounced in this paper we study oligopoly models which combine elements of bass s demand growth model bass f m 1969 a new product growth model for consumer durables management sci 15 january 215 227 the vidale wolfe vidale m l h b wolfe 1957 an operations research study of sales response to advertising oper res 5 370 381 and ozga ozga s 1960 imperfect markets through lack of knowledge quart j econom 74 29 52 advertising models with linear or quadratic costs and the production learning curve hirschmann w p 1964 profit from the learning curve harvard bus rev 42 january february 125 139 the boston consulting group 1972 perspectives on experience the boston consulting group boston in the monopoly case n 1 the optimal advertising function is derived by applying green s theorem in the duopoly n 2 and triopoly n 3 cases we use discrete differential game models and find nash equilibrium solutions in each of these models the form of the optimal policy is easy to find but because of the complicated nature of the resulting differential equations closed form solutions for the optimal state and control trajectories are impossible to find hence we use a computer to compute these optimal trajectories and plot them for various parameter settings because 13n parameters must be chosen to define a model with n players a complete search of the parameter space is clearly impossible we content ourselves in this paper with presenting computer plots of four different interesting encounters of the triopoly model our methods can be extended to work just as well for competitive encounters among n players where 1 n 10 we believe that in this paper we have opened up the way to studying oligopoly theory with a small number of participants and under widely varying conditions although the lack of closed form solutions may disappoint some readers we feel that the easy availability of graphical solutions is a more than adequate substitute

investment and harvest strategies of the finnish forest sector under different forest tax policies a differential game approach with computer based decision aid abstract this study deals with the simultaneous solution of the investment harvest and taxation problems of the finnish forest sector these strategic questions involve competitive and contradictory interests among forestry the forest industry and society we build a computer based decision aid to support a decision maker who wants to analyze the consequences of different forest tax policies it is essential to this computational approach that only minor mathematical manipulations are needed to produce equilibrium open loop nash harvest and investment strategies moreover as a differential game approach it allows us to study the tax incidence we solve our model under three alternative tax policies lump sum unit and yield taxes