collusion in multiproduct oligopoly games under a finite horizon applying recent results on finitely repeated games to oligopoly theory the author finds that there exists a class of finite horizon output games in which collusion can be achieved as a subgame perfect equilibrium trigger strategies prevent defection from the cooperative outcome by credibly threatening that the defector will be forced to exit the industry for the case of a multiproduct oligopoly it is shown that collusion in one market can be enforced by the threat of punishment in a second market if someone defects even though the two markets are structurally independent the firms make them strategically interdependent through their strategies copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

planning under incomplete information and the ratchet effect abstract central planning of production is usually performed under asymmetric information the firm in general has more information about its productive possibilities than the central planner from now on for short cp this justifies the use of incentives schemes in which the cp does not directly fix activity levels casual observation of such existing schemes suggests that the time dimensions is crucial for their working typically the cp revises the incentive scheme over time to take into account the information provided by the firm s performance managers of centrally planned economies as well as economists have long recognized that this revision induces firms to underproduce in order to avoid demanding schemes in the future this is the ratchet effect it is purpose of the present paper to study the ratchet effect under the non commitment assumption which we believe to be more realistic the inadequacy of conceptual tools made if difficult in the past to consider such an assumption now basic research on dynamic games with incomplete information recently resulted in new ideas which look particularly relevant for a theoretical analysis of the problem

capital budgets borrowing rules and state capital spending abstract this paper compares the level and composition of government spending in u s states that maintain separate budgets for capital and operating expenditures with that in states that employ unified budgets it also investigates the effects of pay as you go financing rules for capital projects the empirical findings suggest that states with separate capital budgets spend more on public capital projects than comparable states with unified budgets there is no evidence that the presence or absence of a capital budget affects the level of non capital spending pay as you go requirements for financing capital projects are associated with lower levels of both capital and non capital spending

government policy and the firm s capital structure abstract the purpose of this paper is to examine the effects of commonly observed forms of government intervention on the firm s capital structure we show that since market claims against the firm are always properly priced the firm is forced to take market claimants interests into account on the other hand since government claims are usually not adjusted for risk the firm can take advantage of the government it does so by choosing strategies that extract maximum value minimum cost from these policies in particular the firm uses its capital capital structure to maximize the value of the policy thus leading to a determinate capital strucure

economic development institutional change and the political economy of agricultural protection an econometric study of belgium since the 19th century this empirical study uses 100 years of annual data on 11 agricultural commodities from belgium to measure the impact of structural changes coinciding with economic development and changes in political institutions on agricultural protection the analysis shows that changes in agricultural protection are caused by a combination of factors governments have increased protection and support to farmers when world market prices for their commodities fell and vice versa offsetting market effects on producer incomes other economic determinants were the share of the commodities in total consumer expenditures negative effect and in total output of the economy positive effect with belgium a small economy there was no impact of the trade position changes in political institutions have affected agricultural protection democratic reforms which induced a significant shift in the political balance towards agricultural interests such as the introduction of the one man one vote system led to an increase in agricultural protection the integration of belgian agricultural policies in the common agricultural policy in 1968 coincided with an increase in protection ceteris paribus both institutional factors related to changes in access to and information about the decision making at the eu level and structural changes in the agricultural and food economy may explain this effect

second order sustainability conditions for the development of sustainable innovations in a dynamic environment abstract in particular radical innovations can be important means to achieving improved sustainability due to the existence of path dependency and lock in however the transition from one technological trajectory to another more sustainable one is often impeded by significant barriers fortunately these barriers are by their nature subject to substantial changes in time so it makes sense to carefully distinguish between periods of stability showing high barriers in which the given trajectory can hardly be left and periods of instability characterized by low barriers where a new trajectory can be reached more easily the latter distinction matters since sustainable innovations often rely on governmental regulation and the economic burden arising from this regulation will be much lower in periods of instability moreover due to the complexity and dynamics of change in their respective environments innovations are generally associated with fundamental uncertainty such that it becomes impossible to predict the degree of sustainability yielded by specific innovations in the longer run under these circumstances it is essential to facilitate the change between trajectories and to allow for the possibility to select between a variety of alternative trajectories within a process of trial and error sustainability as viewed from this evolutionary perspective is therefore better understood as the general capability to adapt that is to readily change from less to more sustainable technological trajectories since the latter kind of sustainability determines the conditions under which the former kind i e sustainability related to a specific technology can be achieved the two kinds are respectively called second order and first order sustainability finally a series of determinants and corresponding indicators from the techno economic political and socio cultural sphere is identified which after proper measurement and weighting allow for making an assessment whether and when the incumbent industry is sufficiently destabilized and the political system rendered sufficiently favorable to the new more sustainable technology such that a transition to the preferred trajectory is possible without too much effort

group dynamics in experimental studies the bertrand paradox revisited abstract different information provision in experimental markets can drastically change subjects behavior considering the repeated bertrand duopoly game of dufwenberg and gneezy dufwenberg m gneezy s u 2000 price competition and market concentration an experimental study international journal of industrial organization 18 7 22 we find that population feedback about the prices in other markets outside a subjects own current market causes group dynamics that prevent prices from convergence to nash equilibrium limited information comprising only the decisions of a subject s own opponent in contrast leads to competitive behavior when we extend the number of periods from 10 to 25 in the full information treatment full we observe a very robust cyclical up and down movement of prices we can explain tacit coordination in our experiment with an extended learning direction model and leadership by example

fitness and age review of carroll and hannan s demography of corporations and industries the demography of corporations and industries 2000 by glenn r carroll and t michael hannan is a welcome addition to a body of empirical analysis of firms and industries that studies the effects of technological change and other changes that occur over time the book contains a wealth of facts and some new insights too it will make useful secondary reading in some graduate courses in economics and i would recommend it to anyone whose research relates to the concept of creative destruction

a theory of soft capture in this paper wee propose a model for regulatory capture that is based on information transmission and asymmetric information in a three tier model a regulator is charged by a political principal to provide a signal for the type of a regulated firm only the firm can observe his type and the production of a correlated signal with a given accuracy is costly for the regulator the firm can costlessly provide an alternative signal of lower accuracy that is presented to the regulator in a self enforcing equilibrium the regulator transmits the firm produced signal internalizes its own savings in information cost and the firm enjoys higher information rents the main feature of soft capture is that it is not based on a reciprocity of favors but on a congruence of interests between the firm and the regulator

an incomplete contract perspective on public good provision abstract this paper surveys what can be learned from recent advances in the incomplete contract literature to understand how public goods are or should be provided the paper starts with a section on the full information case that presents and discusses the classical samuelson condition on the optimal provision of public goods the rest of the paper presents results under asymmetric information it is constituted of two main parts in the first one the social planner has complete contracting ability we discuss the basic setting and assumptions of this comprehensive contracting approach and study the trade offs it generates the second part of the paper is devoted to the study of contracting incompleteness such incompleteness can emerge from various sources which we present and discuss we then study the case of a politically chosen decision maker and the consequences of its inability to commit for more than one period and of the ability for individuals to form groups finally we address the problem of the choice between public and private forms of public good provision the concluding section summarizes the main policy lessons

political economy information and incentives abstract this paper shows how the instruments of incentive theory can be used to develop some views about the proper design of governments to avoid the capture of politicians and bureaucrats by interest groups first treating politicians as informed supervisors to whom economic policy is delegated we show the usefulness of the separation of powers to increase the transaction costs of collusion the relevance of asymmetric control for avoiding reciprocal favors the incompleteness of the constitutional contract leaves discretion to politicians who become residual decision makers we study the trade offs between greater efficiency obtained by allowing powerful instruments to politicians and less discretion by restricting on the contrary those instruments determinants of those trade offs are the variability of the environment the extent of asymmetric information about tastes and technologies and the size of majorities finally we show the new theory of incentives for group behavior can be used to determine the transaction costs of collusion under asymmetric information and to which extent these costs relax the constraints imposed on government by collusive behavior

collusion delegation and supervision with soft information this paper derives an equivalence principle between organizational forms of supervisory and productive activities we consider an organization with an agent privately informed on his productivity and a risk averse supervisor getting signals on the agent s type in a centralized organization the principal can communicate and contract with both the supervisor and the agent however these two agents can collude against the principal in a decentralized organization the principal only communicates and contracts with the supervisor who in turn sub contracts with the agent we show that the two organizations achieve the same outcome we discuss this equivalence and provide various comparative statics results to assess the e ciency of supervisory structures

pricing and regulating affect environmental ethics effluent charges and tradeable permits are economically efficient but rarely used a new explanation for this discrepancy is offered pricing may crowd out environmental ethics in the pricing and via spillovers also in non pricing sectors pricing may therefore increase pollution providing a reason why decision makers tend to reject environmental pricing five propositions showing the conditions for counterproductive effects are advanced they are consistent with available empirical evidence regulation by setting standards and subsidies damage environmental ethics less than pricing because pollution is condoned damaging environmental ethics may prevent political action in favor of the environment

ideological conviction and persuasion in the rent seeking society abstract the paper develops a model of rent seeking in a democratic political context where voting as well as rent seeking matters in this context the paper demonstrates that voter ideology is a constraint on the rent seeking game as well as a possible avenue of rent seeking in a setting where there are both rent seeking and ideological interest groups rent seekers can free ride on the efforts of ideologues which tends to reduce rent seeking effort in a setting where complementary economic and ideological interest groups coordinate their efforts both rent seeking and ideological conflict tend to increase

voting and paying for public goods an application of the theory of the core abstract let any coalition with a majority of all voters have the power to choose the quantities of public goods under rule i a majority coalition bears a cost of its decision that is proportional to its size under rule ii it must bear the whole cost of its decision thus rule i imposes costs on minorities although they have no power to choose the quantities of public goods while rule ii allows goods to have some attributes of semiprivate goods it is shown that a nonempty core under rule i implies a nonempty core under rule ii but not conversely necessary and sufficient conditions in terms of the properties of the von neumann morgenstern characteristic function are given

a quantitative content analysis of the characteristics of rapid growth firms and their founders a group of firms that is attracting attention are rapid growth firms these firms are of particular interest because rapid growth is an indication of market acceptance and firm success by studying rapidgrowth firms researchers can help all firms better understand the attributes associated with firm growth despite these positive outcomes however rapid firm growth is difficult to achieve and maintain this study adds to the literature through a quantitative content analysis of the narrative descriptions of 50 rapid growth firms and a comparison group of 50 slow growth companies the purpose of the study was to draw from the narratives a list of empirically grounded growth related attributes that are associated with rapid growth firms the findings of the study resulted in the advancement of a conceptual model of the attributes of rapid growth firms in four areas founder characteristics firm attributes business practices and human resource management hrm practices

the informational effects of competition and collusion in legislative politics we use a mechanism design approach to study the organization of interest groups in an informational model of lobbying interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers interest groups have private information on their ideal points in a one dimensional policy space and may either compete or adopt more collusive behaviors optimal policies result from a trade off between imposing rules which are non responsive to the groups preferences and flexibility that pleases groups better within a strong coalition interest groups credibly share information which facilitates communication of their joint interests helps screening by the legislature and induces flexible policies responsive to the groups joint interests an informativeness effect competing interest groups better transmit information on their individual preferences a screening effect the socially and privately optimal organization of lobbying favors competition between groups only when their preferences are not too congruent with those of the legislature with more congruence a strong coalition is preferred finally within a weak coalition interest groups must design incentive compatible collusive mechanisms to share information such weak coalitions are always inefficient

interest groups and the electoral control of politicians abstract we develop a model of interest group influence in the presence of repeated electoral competition in each period of the game an interest group attempts to buy an incumbent s policy choice and a voter chooses whether to replace the incumbent with an unknown challenger the voter faces a tension between retaining good politician types and rewarding past performance the model predicts that above average incumbents face little discipline but others are disciplined increasingly and re elected at a higher rate as the interest group becomes more extreme extensions of the model consider term limits long lived groups and multiple groups

the agency cost of internal collusion and schumpeterian growth this paper analyzes the link between the internal organization of rms and the whole process of macroeconomic growth we present a schumpeterian growth model in which monopolies face dynamic agency costs due to the formation of vertical collusions between agents of the organization these agency costs aect incentives to invest and the rate of innovation however when collusion is a self enforcing implicit relationship a higher growth rate shortens the time horizon of colluding agents and makes thus collusion more dicult to enforce we analyze this two ways mechanisms between the growth process and agency problems within the rm and show how the transaction costs of side contracting within the rm and the growth rate of the economy are simultaneously derived

public private partnerships and government spending limits abstract we consider public private partnerships in which a public official selects a project that is then developed and operated by a private contractor we derive optimal public accounting rules when the official s choice among projects is biased by ideology or social ties or because of pandering to special interests we give particular emphasis to how the rules should constrain the official s incentive to understate the costs of her pet projects in the basic model we show that the optimal accounting rule takes the form of a budget cap with a project s expected cost modified to reflect the official s distortionary incentives if the project can be partially financed privately then fixed price contracts can serve to curb political misbehavior by securitizing public sector liabilities we also consider the possibility that development and operations are each handled by different contractors such unbundling deprives public accountants of forward information about future costs but can prevent the official from funneling hidden future rents to contractors

the changing form of overconfidence and its effect on growth expectations at the early stages of startups in this article we attempt to explain the failure of many studies to show a link between entrepreneurs beliefs in their entrepreneurial skills and the actual or expected growth of their venture by using frese and gielnik s action characteristics model of entrepreneurship as an analytical framework and analyzing global entrepreneurship monitor adult population survey data we show that entrepreneurs perceived entrepreneurial skills are consistently inflated over the different phases of the startup albeit in different ways depending on the typical form of overconfidence the link between skill beliefs and growth expectations may be mediated by expectations about competitive advantages moreover the huge drop in growth expectations is not associated with a drop in perceived skills instead other entrepreneurial expectations also become more realistic and their effect strengthens with experience

the bias in favor of pro tariff lobbies abstract we show that the probability of success of the pro tariff lobby defined as a decreasing function of the ratio of consumer loss to producer gain rent generated by the tariff rises with the tariff under very general conditions this appears as an exception to becker s view that less distortionary measures tend to be adopted over their more distortionary counterparts we then provide a micro foundation for our probability definition using the imperfectly discriminating lobbying framework

the ambitious entrepreneur abstract during the last two decades researchers have sought to develop categories of entrepreneurs and their businesses along a variety of dimensions to better comprehend and analyze the entrepreneurial growth process some of this research has focused on differences related to industrial sectors firm size the geographical region in which a business is located the use of high technology or low technology and the life cycle stage of the firm i e start up vs more mature formalized companies researchers have also considered ways in which entrepreneurs can be differentiated from small business managers one of these classifications is based on the entrepreneur s desire to grow the business rapidly this is the focus of our study to date the media have paid considerable attention to rapidly growing new ventures however still lacking are large scale research studies guided by theory through which we can expand our knowledge of the underlying factors supporting ambitious expansion plans some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business factors include the strategic origin of the business i e the methods and paths through which the firm was founded previous experience of the founder owner and the ability of the entrepreneur to set realistic measurable goals and to manage conflict effectively our study attempted to identify the strategic paths chosen by entrepreneurs and the relation of those paths to the growth orientation of the firm the entrepreneurs sampled in this study are women entrepreneurs across a wide range of industrial sectors recent reviews of entrepreneurship research have suggested the need for more studies comparing high growth firms with slower growth firms to better delineate their differences in strategic choices and behaviors our study sought to answer the following questions what characterizes a high growth oriented entrepreneur is this distinction associated with specific strategic intentions prior experience equity held in previous firms the type of company structure in place or success factors the entrepreneur perceives are important to the business do high growth entrepreneurs show greater entrepreneurial intensity i e commitment to the firm s success are they willing to pay the price for their own and their firm s success i e the opportunity costs associated with business success and growth other relationships under investigation included different patterns of financing the business start up and early growth do high growth entrepreneurs use unique sources of funding compared with lower growth entrepreneurs eight hundred thirty two entrepreneurs responded to a survey in which they were asked to describe their growth intentions along nineteen strategic dimensions as well as respond to the foregoing questions some of the strategic activity measures included adding a new product or service expanding operations selling to a new market and applying for a loan to expand operations actual growth rates based on sales revenues were calculated and average annualized growth rates of the industrial sectors represented in the sample were obtained this study showed that high growth oriented entrepreneurs were clearly different from low growth oriented entrepreneurs along several dimensions the former were much more likely to select strategies for their firms that permitted greater focus on market expansion and new technologies to exhibit greater intensity towards business ownership my business is the most important activity in my life and to be willing to incur greater opportunity costs for the success of their firms i would rather own my own business than earn a higher salary while employed by someone else the high growth oriented entrepreneurs tended to have a more structured approach to organizing their businesses which suggests a more disciplined perception of managing the firm in summary results showed the group of high growth oriented entrepreneurs labeled ambitious as having the following distinctions strategic intentions that emphasize market growth and technological change stronger commitment to the success of the business greater willingness to sacrifice on behalf of the business earlier planning for the growth of the business utilization of a team based form of organization design concern for reputation and quality adequate capitalization strong leadership and utilization of a wider range of financing sources for the expansion of the venture the purpose in uncovering these differences is to enable entrepreneurs and researchers to identify more clearly the attributes of rapid growth ventures and their founders and to move closer to a field based model of the entrepreneurial growth process which will help delineate the alternative paths to venture growth and organizational change

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

rent seeking market structure and growth we study the role of productive and unproductive entrepreneurship in economic growth in a setting where firms compete in both economic and political markets specifically firms compete for market share through cost reducing technological innovation and they vie for influence over government transfer policy through rent seeking activities we find that rent seeking affects growth in two ways it allows firms to ignore economic competition leading to less innovation and it alters the number of firms that are supported in equilibrium the former effect is negative while the latter is ambiguous we show how these effects depend on various characteristics of economic and political markets

transaction costs institutional design and the separation of powers abstract the internal organization of the government can be used as a constraint on the capture of political decision makers in a setting where multiple interest groups try to influence policy outcomes centralization i e the choice of a single agency dealing with all interest groups is costly because it induces a better coordination of their influences the choice of specialized agencies is better because it increases the overall transaction costs of capture making agencies more immune to capture by interest groups more generally we discuss how an institutional design relying on separation of powers among specialized agencies may improve policy outcomes

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

credible communication in dynastic government abstract this paper studies information disclosure in a model of dynastic government when information about past policy choices comes exclusively from the reports of previous administrations each administration has an incentive to choose its suboptimal one shot expenditure policy and then misrepresent its choice to its successor consequently it has been suggested that horizontal accountability i e a system of governance where auditing functions lie outside the executive branch can ensure credible disclosure of a government s activities this paper suggests a cautious approach to that view the baseline model examines the reporting incentives of an external auditor who can independently verify the information each period even with auditing credible disclosure is shown to be problematic various extensions to this baseline model are examined in one extension liberal i e those prefering larger government expenditures and conservative those prefering smaller expenditures regimes and auditors evolve over time it is shown that conservative liberal auditors are not credible when the current regime is also conservative liberal moreover because information transmission stops when the auditor s and the regime s biases coincide effective deterrents even in the good periods when the auditor s and the administration s biases differ are difficult to construct in all periods the equilibrium requirement of auditor neutrality constrains the dynamic incentives for efficient policy choices these constraints are shown to bind away from optimal policies in standard constructions of equilibrium various ways in which auditing protocols can overcome these problems are discussed

continued entrepreneurship ability need and opportunity as determinants of small firm growth the purpose of this research was to enhance our understanding of the growth or non growth of individual small businesses growth here being regarded as an indication of continued entrepreneurship taken together earlier studies have suggested a very large number of determinants of entrepreneurship and growth yet no very strong explanatory factors emerge it is argued here that all of the specific lowlevel explanatory variables that have previously been used can be regarded as aspects of either of three major determinants ability need and opportunity a model based on these three major factors is developed and the results of previous studies are reviewed in the light of this more abstract model in the model objective factors are separated from their subjective counterparts and it is suggested that subjective factors or reality as perceived influence growth motivation and direct behavior although objective factors only partly determine subjective perceptions they can have important direct effects on outcomes i e actual growth using survey data from more than 400 swedish small firms and applying partial least squares analysis which is a technique for analyzing structural relations among indirectly measured concepts the parameters of the model are empirically estimated the results largely lend support for the usefulness of the model more specifically the analyses suggest that 1 objective measures of ability need and opportunity can explain a substantial share of the variation in actual historical growth rates 2 objective and subjective measures of these three factors can explain a substantial share of the variation in growth motivation 3 in both cases need related issues appear more important than ability and opportunity which would mean that satiation is the major reason why small firms stop growing 4 subjective factors contain growth relevant information that is not captured by objective measures 5 direct effects of objective variables on actual growth can be traced 6 some relations are consistent whereas others seem to vary considerably across industries and 7 while the model largely gains support the analyses also suggest some additional relations that are theoretically reasonable and may deserve consideration in future studies finally it is argued that for the advancement of entrepreneurship research conceptual models at a higher level of abstraction like the one developed in this article are needed such models can add meaning to empirical facts and have the virtue of reducing complexity without assuming away too many potential contingencies it is also suggested that entrepreneurship is a matter of degree and can show itself in different ways such as start up growth innovation etc in practice the sole measure of entrepreneurship has often been a person s current status as being or not being the founder or owner manager of a small firm in future studies the use of a composite measure of the degree of entrepreneurship may prove more fruitful than the comparison of characteristics approach has been

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

behind the revolving door a new view of public utility regulation regulatory officials frequently work for firms they regulate after they leave office this revolving door has been the subject of much scrutiny owing to the natural suspicion of corruption in a time dependent supergame i take a strategic look behind the revolving door and find it can lead to improved performance of regulated industries when firm managers and regulators have finite and concurrent terms investment incentives are minimal staggered terms and revolving doors can result in improved performance of regulated firms when each side s actions at each date are contingent on past outcomes

explaining price policy bias in agriculture the calculus of support maximizing politicians a model is developed to explain observed patterns of policy intervention in agriculture we analyze the interaction between political support seeking politicians and supportsupplying citizens society consists of a rural and urban group we determine the effects on transfers of relative group size disparities in income endowments between groups and the deadweight loss of redistribution the framework advanced is an alternative to that of the interest group model and is used to explain for example why the export sectors in developing countries are taxed more and why the united kingdom is less adamant for higher price supports than germany

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

studying the role of political competition in the evolution of government size over long horizons here we argue for the use of cointegration and error correction analysis to combine economic factors that are nonstationary with political factors that are stationary into an empirical model of the evolution of public policy over long periods the approach is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the government of canada over 130 years political competition emerges as the primary political factor affecting government size

reputation and equilibrium selection in games with a patient player a single long run player plays a simultaneous move stage game against a sequence of opponents who play only once but observe all previous play let the stackelberg strategy be the pure strategy to which the long run player would most like to commit himself if there is positive prior probability that the long run player will always play the stackelberg strategy then his payoff in any nash equilibrium exceeds a bound that converges to the stackelberg payoff as his discount factor approaches one when the stage game is not simultaneous move this result must be modified to account for the possibility that distinct strategies of the long run player are observationally equivalent

price discrimination or uniform pricing which colludes more abstract conventional wisdom attributes different economic outcomes of uniform pricing and price discrimination to the heterogeneity in market conditions or market participants such as differences in demand elasticity or production costs we offer a new explanation for the observed differences that relates to behavioral aspects rather than demand or supply side effects in particular in a symmetric bertrand duopoly laboratory experiment for which theory predicts no differences between the two pricing regimes we find that tacit price collusion is systematically higher under price discrimination than under uniform pricing

growth aspirations and cultural support for entrepreneurship a comparison of post socialist countries based on gem data this paper explores whether significantly different growth aspirations of early stage entrepreneurs in slovenia compared to those in hungary and croatia are also accompanied by significantly different opportunity recognition cultural support for entrepreneurship and self efficacy our results suggest that a higher degree of alertness to unexploited perceived opportunities and cultural support for entrepreneurial motivation may be the cause of higher growth aspirations of slovenian early stage entrepreneurs while self efficacy with regard to entrepreneurial skills knowledge and experience was not found to be crucial

honest certification and the threat of capture abstract this paper derives conditions under which reputation enables certifiers to resist capture these conditions alone have strong implications for the industrial organization of certification markets 1 honest certification requires high prices that may even exceed the static monopoly price 2 honest certification exhibits economies of scale and constitutes a natural monopoly 3 price competition tends to a monopolization the results derive from a general principle of reputation models that favors concentration this principle implies benefits from specialization and explains specialized certifiers as efficient market institutions that sell reputation as a service to other firms

the dynamic efficiency of regulatory constitutions in this article we model regulation as a repeated game between a utility facing a random sequence of demands and a regulator tempted to underreward past investment rate of return regulation designed with a constitutional commitment to an adequate rate of return on capital prudently invested is able to support an efficient investment program as a subgame perfect nash equilibrium for a larger set of parameter values than rate of return regulation without such a commitment furthermore rate of return regulation is superior to price regulation according to the same criterion assuming that the regulator is unable to make state contingent transfer payments

the life cycle of regulatory agencies dynamic capture and transaction costs the dynamics of regulation is analysed in a model where regulatory capture comes from the repeated interaction between an interest group and a regulatory agency regulatory institutions offer a framework for this dynamic process they put constraints on the interest group s influence the dynamics of regulation and its long run outcome depend on the political principal s the regulator s and the regulated firm s time preferences and their information some foundations for the transaction costs of side contracting used in the standard literature on collusion are provided those transaction costs are linked to the precise nature of regulatory institutions

the political economy of farmland ownership regulations and land prices one of the most ubiquitous forms of agricultural regulation is a restriction on farmland ownership one canadian example of a farmland ownership restriction is the saskatchewan farm security act fsa passed in 1974 the purpose of this article is to explain using a political economy framework why the fsa was implemented and to estimate the effect of the fsa on saskatchewan farmland values a present value pv model is used to estimate the relationship between land values rents and the regulation the hausman endogeneity test reveals that the regulation variable is endogenous with the land price the sign of the regulation variable is negative which fits with the theory i e the more stringent the regulation the lower the land value we estimate that the regulation lowered saskatchewan farmland prices by an average of 4 to 34 us acre depending on whether ordinary least squares ols or two stage least squares tsls is employed in the estimation over the period of 1974 2001