getting big too fast strategic dynamics with increasing returns and bounded rationality neoclassical models of strategic behavior have yielded many insights into competitive behavior despite the fact that they often rely on a number of assumptions including instantaneous market clearing and perfect foresight that have been called into question by a broad range of research researchers generally argue that these assumptions are good enough to predict an industry s probable equilibria and that disequilibrium adjustments and bounded rationality have limited competitive implications here we focus on the case of strategy in the presence of increasing returns to highlight how relaxing these two assumptions can lead to outcomes quite different from those predicted by standard neoclassical models prior research suggests that in the presence of increasing returns tight appropriability and accommodating rivals in some circumstances early entrants can achieve sustained competitive advantage by pursuing get big fast gbf strategies rapidly expanding capacity and cutting prices to gain market share advantage and exploit positive feedbacks faster than their rivals using a simulation of the duopoly case we show that when the industry moves slowly compared to capacity adjustment delays boundedly rational firms find their way to the equilibria predicted by conventional models however when market dynamics are rapid relative to capacity adjustment forecasting errors lead to excess capacity overwhelming the advantage conferred by increasing returns our results highlight the risks of ignoring the role of disequilibrium dynamics and bounded rationality in shaping competitive outcomes and demonstrate how both can be incorporated into strategic analysis to form a dynamic behavioral game theory amenable to rigorous analysis

collusion facilitating and collusion breaking power of simultaneous ascending and descending price auctions this article demonstrates that a robust tacit collusion evolves quickly in a collusion incubator environment but is destroyed by the simultaneous descending price auction theories of collusion producing behavior along with the detail of the states on which strategies are conditioned lead to a deeper understanding of how tacit collusion evolves and its necessary conditions these theories explain how the descending price auction destroys the collusion the experiments proceed by conducting simultaneous ascending price auctions in the collusion incubator then once the tacit collusion developed changing to the descending auction the change moved prices from collusive levels to near competitive levels

the effect of collusion on efficiency in experimental auctions abstract this paper examines the effect of collusion on allocative efficiency in a second price sealed bid auction in which bidders valuations have both private and common value components we present a theoretical model which shows that explicit collusion improves average efficiency furthermore a reduction in common value signal variance increases the efficiency of allocations when a cartel is present we test for the presence of these patterns in a laboratory experiment subjects can choose whether to compete or to form a cartel colluding bidders can communicate and make side payments using a knockout auction our results show that a large majority of bidders joins a cartel and collusion has a negative impact on efficiency

multiple object auctions with budget constrained bidders in the last few years governments in many parts of the world have aggressively sought to privatize socially held assets this wave of privatization has included the sale of industrial enterprises in the former soviet union and eastern europe the sale of public transportation systems in britain and scandinavia and the sale of radio spectra in the u s both the enormity and the importance of these sales have naturally led to an examination of how best to accomplish this task auctions have been proposed and have frequently been used as time honoured convenient and attractive mechanisms for such sales this in turn has led to a revival of interest in the theory of auctions particularly those involving multiple objects the magnitude of these privatization sales has meant that in many instances it is realistic to consider that buyers may run up against liquidity or borrowing constraints the presence of these financial constraints introduces important differences into traditional auction theory for instance pitchik and schotter 1986 and che and gale 1996 1998 have shown that when bidders are subject to such constraints the conclusion of the celebrated revenue equivalence theorem no longer holds when multiple objects are auctioned in the presence of budget constraints it may be advantageous for a bidder to bid aggressively on one object with a view to raising the price paid by his rival and depleting his budget so that the second object may then be obtained at a lower price in effect a bidder may wish to raise a rival s costs in one market in order to gain advantage in another thus unlike in traditional auction theory a particular bidder s payoff is affected by the price paid by a rival bidder it is important to note that this effect comes into play only when several objects are sold

the winner s curse experiments with buyers and with sellers this paper explores the winner s curse phenomena as it was studied experimentally by kagel and levin experiments with the winner s curse are complicated by the fact that subjects can lose money and the experimenter has only a limited means of collecting it from them thus subjects enjoy only limited liability which has theoretical implications for behavior in the kagel and levin experiments subjects were removed from the bidders competition after losses reached a predetermined value this experimental procedure has unknown implications for the results so ambiguity exists about whether the winner s curse was actually observed in this study their results were replicated in an environment in which subjects were not removed the case in which competitors are sellers is also studied bankruptcy cannot be a problem in sellers competition in both cases the winner s curse is observed thus the limited liability cannot be an explanation for the phenomenon reported by kagel and levin in addition the paper examines the bidding behavior of all individuals and shows that this behavior does not fit any of the tested theories either on the aggregate or individual level the winner s curse did not disappear over time during the conduct of the research

an experimental investigation of the patterns of international trade this study is the first attempt to create and study a laboratory economy with some of the prominent features of an international economic system the concept of multiple countries in which each country has its own technology preferences and resource endowments is introduced and operationalized the questions posed in the study are related to the law of comparative advantage factor price equalization terms of trade efficiency in production and exchange as guided by multiple and interacting markets and the effects of tariffs on international transactions the study builds on previous work in the experimental study of general equilibrium phenomena

information effects in uniform price multi unit dutch auctions we design a multi unit descending price dutch auction mechanism that has applications for resource allocation and pricing problems we address specific auction design choices by theoretically and experimentally determining optimal information disclosure along two dimensions bidders are either informed of the number of bidders in the auction or know that it is one of two possible sizes they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders we find that revealing group size decreases bids and therefore revenue if units remaining are not shown when group size is unknown the price also falls if the number of units remaining is revealed the most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining these laboratory results conform to some directional predictions from our theory although overbidding is common

collusion via signalling in simultaneous ascending bid auctions with heterogeneous objects with and without complementarities collusive equilibria exist in simultaneous ascending bid auctions with multiple objects even with large complementarities in the buyers utility functions the bidders collude by dividing the objects among themselves while keeping the prices low in the most collusive equilibrium the complementarities are never realized the scope for collusion however narrows as the ratio between the number of bidders and the number of objects increases

a study of collusion in first price auctions this paper examines the bidding for school milk contracts in florida and texas during the 1980s in both states firms were convicted of bid rigging the data and legal evidence suggest that the cartels in the two states allocate contracts in different ways one cartel divides the market among members while the other cartel also uses side payments to compensate members for refraining from bidding we show that both forms of cartel agreements are almost optimal provided the number of contracts is sufficiently large in the auction the cartel bidder may face competition from non cartel bidders the presence of an optimal cartel induces an asymmetry in the auction the selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non cartel bidder the data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels

collusion and equilibrium selection in auctions we study bidder collusion and test the power of payoff dominance as an equilibrium selection principle in experimental multi object ascending auctions in these institutions low price collusive equilibria exist along with competitive payoff inferior equilibria achieving payoff superior collusive outcomes requires complex strategies that depending on the environment may involve signalling market splitting and bid rotation we provide the first systematic evidence of successful bidder collusion in such complex environments without communication the results demonstrate that in repeated settings bidders are often able to coordinate on payoff superior outcomes with the choice of collusive strategies varying systematically with the environment auctions for timber cars oil drilling rights and spectrum bandwidth are just a few examples of markets where multiple heterogeneous lots are offered for sale simultaneously in multi object ascending auctions the applied issue of collusion and the theoretical issue of equilibrium selection are closely linked in these auctions bidders can profit by splitting the markets by acting as local monopsonists for a disjoint subset of the objects the bidders lower the price they must pay as opposed to the sealed bid auction the ascending auction format provides bidders with the opportunity to coordinate tacitly on dividing markets and to punish non collusive bidding thus low price collusive equilibria co exist along with high price competitive equilibria even in a non repeated setting brusco and lopomo 2002 if there are complementarities in bidder values across objects and auctions are repeated bidders may further benefit by splitting the markets over time and taking turns in buying packages at low prices these opportunities make the multi object ascending auction an ideal institution for the study of equilibrium selection assuming that communication between the bidders is limited to the bidding any splitting of the markets must be tacitly coordinated in the early stages of the auction thus achieving payoff superior collusive outcomes requires complex strategies that depending on the environment may involve signalling market splitting and bid rotation while such tacit coordination is possible in theory it is an empirical question of whether it may be achieved in practice

a test that discriminates between two models of the dutch first auction non isomorphism abstract previous experiments reject the hypothesis that the dutch and first auctions are isomorphic two alternatives to the standard normal form analysis of the dutch auction are formalized 1 bidders violate bayes rule 2 bidders experience a utility of suspense that is additive with the utility of monetary reward paired comparisons of bidding behavior between groups in which the treatment is to triple the payoff of the baseline group yields no significant effect of this treatment we therefore reject the utility of suspense model

the evolving impact of combinatorial opportunities and exhaustion on innovation by business groups as market development increases the case of taiwan business groups are key sources of innovation in emerging market economies but we understand little about why innovativeness differs across groups and over time variation in the density of intragroup buyer supplier ties which are common structural linkages among group affiliates can help explain both cross sectional and temporal heterogeneity of group innovativeness we argue that greater buyer supplier density within a group initially creates combinatorial opportunities that contribute to group innovativeness but ultimately generates combinatorial exhaustion that constrains innovation combinatorial exhaustion will set in at lower levels of density as the market environment becomes more developed because the opportunity costs of local search increase the research introduces a dynamic argument to studies of business group innovation this paper was accepted by bruno cassiman business strategy

the division of gains from complementarities in human capital intensive activity this study uses data from the national basketball association to explore organizational mechanisms that affect the division of firm surplus in human capital intensive activity it builds on the idea that reciprocal interdependence among team members creates the potential for complementarity complementarity in turn translates into higher firm surplus the division of this surplus is subject to bargaining between the firm owner and labor we argue that when complementarity increases the firm owner s share of surplus will grow if interdependence among team members is symmetric furthermore we identify three levers that make complementarity amenable to managerial design the nature of interaction among team members the relative dominance of team members and the composition of a team we find that greater interaction among team members and higher recruitment of team oriented individuals are associated with increased complementarity whereas dominant team members are associated with reduced complementarity the study contributes to the literature on organization design by extending its implications to the division of surplus in human capital intensive activity

assessing the resource base of japanese and u s auto producers a stochastic frontier production function approach the resource based view of the firm has become an important conceptual framework in strategic management but has been widely criticized for lack of an empirical base to address this deficit we utilize a new method for identifying interfirm differences in efficiency within the context of stochastic frontier production functions using data on japanese and u s automobile manufacturers we develop measures of resources and capabilities and test for linkages with firm performance the results show the influence of manufacturing proficiency and scale economies at the firm and plant level we apply the parameter estimates to account for toyota s superior efficiency relative to other producers

creating monopoly power abstract the standard analysis of monopoly assumes that the seller has price setting power without this assumption it is not clear what monopoly power is or whether it exists to address this question this paper uses the core of a tu game in place of price setting the core provides a model of competition in which outcomes can be interpreted as the consequences of free form bargaining or negotiations this paper shows that if a core analysis is embedded in a capacity choice context monopoly power can be created with credible undersupply but in monopoly a core analysis also shows that competition only partially determines the outcomes using a biform game analysis this paper shows that the monopolist s view of this indeterminacy directly affects its capacity choice a moderate view of the indeterminacy generates outcomes that are more socially beneficial than setting a uniform price the two extreme views of the indeterminacy are shown to generate results consistent with uniform pricing and perfect price discrimination

kingpins bottlenecks and value dynamics along a sector this paper explores the dynamics of value distribution within a sector using data on the u s computer industry as an illustration it provides exploratory quantitative evidence for the way in which conditions within the segments of a sector s value chain affect the profitability of those segments compared with the sector as a whole to consider how value shifts from one part of the sector such as computer assemblers to another such as software and microprocessor makers we look at how conditions within a segment such as software developers affect changes in the value share of that segment compared with the entire sector in terms of market capitalization we find that the presence of what we call kingpins firms with superior capabilities modeled in our study as having superior market capitalization and as being disproportionately important in terms of research and development r d is correlated with a higher share of total sector value suggesting that kingpins can help a segment to become a bottleneck sales concentration and the level of r d expenditure are not always reliable predictors kingpins exert a positive externality on their direct competitors yet their segments display increasing internal inequality over time making the presence of kingpins a double edged sword for their peers our findings extend recent work on industry architectures highlighting the interconnectedness of different segments within a sector they also provide a structure to help study the dynamics of value migration which has not yet attracted much academic scrutiny

how do value creation and competition determine whether a firm appropriates value how does competition among economic actors determine the value that each is able to appropriate we provide a formal general framework within which this question can be posed and answered and then provide several results chief among them is a condition that is both required for and guarantees value appropriation we apply our methodology to i assess the familiar notion that uniqueness inimitability and competition imply value appropriation and ii determine the value appropriation possibilities for an innovator whose unique discovery is of use to several others who can compete for the right to use it

competing by restricting choice the case of search platforms we show that a two sided matching platform can successfully compete by limiting the number of choices it offers to its customers while charging higher prices than platforms with unrestricted choice we develop a stylized model of online dating where agents with different outside options match based on how much they like each other starting from these microfoundations we derive the strength and direction of indirect network effects and show that increasing the number of potential matches has a positive effect due to larger choice but also a negative effect due to competition between agents on the same side agents resolve the trade off between these competing effects differently depending on their outside options for agents with high outside options the choice effect is stronger than the competition effect leading them to prefer an unrestricted choice platform the opposite is the case for agents with low outside options who then have higher willingness to pay for a platform restricting choice as

intraconnectivity and interconnectivity when value creation may reduce profits this paper analyses firms decisions to provide connectivity to their customers we distinguish between intraconnectivity the ability of one firm s customers to connect to each other and interconnectivity the ability of one firm s customers to connect with another firm s customers the profitability implications of allowing connectivity are not a straightforward consequence of the consumer value of connectivity because connectivity affects not only the customer value but also the intensity of competition by creating or changing network externality we find that if sales are driven by brand switching rather than by category expansion a firm may find it optimal not to provide intraconnectivity even if providing it is not costly and may find it optimal to provide interconnectivity even at a cost exceeding the consumer value of connectivity on the other hand if category expansion is possible providing intraconnectivity may be profitable in this case either the equilibrium intraconnectivity provision may be asymmetric or both firms may find it individually optimal to provide intraconnectivity under certain conditions in the latter case the firms choice of intraconnectivity is a prisoner s dilemma game

appropriation and efficiency a revision of the first theorem of welfare economics the first theorem of welfare economics rests on the assumption that individuals have neither price making nor market making capacities we offer a revision in which individuals have such capacities the revision emphasizes two keys for market efficiency i the need to align private rewards with social contributions called full appropriation and ii the need for an assumption to counter the possibility of coordination failures in the choice of produced commodities called noncomplementarity we also emphasize that information about prices of unmarketed commodities involves decentralized knowledge available only to product innovators and that pecuniary extemalities are important potential sources of market failure jel d51 d60 d62

social insurance and transition the authors study the general equilibrium effects of social insurance on transition in a model in which the process of moving workers from matches in the state sector to new matches in the private sector takes time and involves uncertainty as might be expected adding social insurance to an economy without any improves welfare contrary to standard intuition however adding social insurance may slow transition the authors show that this result depends crucially on general equilibrium interactions of interest rates and savings under alternative market structures copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

do new competitors new customers new suppliers sustain destroy or create competitive advantage a new player e g an entrant joining an existing game generally al lows more value to be created but also creates new alternatives for exist ing players greater value expands the range of equilibrium appropriation levels for an existing player in particular lowering the minimum equilib rium appropriation the emergence of new alternatives has the opposite eect we say a player has competitive advantage if the player s minimum equilibrium appropriation is strictly greater than the player s outside al ternative that is the forces of competition alone as embodied in the conditions de ning equilibrium su ce to guarantee a player appropriates more than the best alternative to being in the game i e a sustainable performance advantage when a player has competitive advantage pre entry but not post entry we say entry destroys competitive advantage likewise for creating and sustaining competitive advantage our results provide complete char acterizations i e if and only if statements of the features of a game that cause the addition of a new player to destroy create or sustain competitive advantage in a general coalitional game these results are of importance for strategy issues since as argued by proponents of value based business strategy e g brandenburger and stuart 1996 many of the economic interactions of interest in strategy are well described as coalitional games

tacit collusion in auctions and conditions for its facilitation and prevention equilibrium selection in laboratory experimental markets the paper studies bidder behavior in simultaneous continuous ascending price auctions we design and implement a collusion incubator environment based on a type of public symmetrically folded and item aligned preferences tacit collusion develops quickly and reliably within the environment once tacit collusion developed it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game theoretic model the only successful remedy was a non public change in the preference of participants that destroyed the symmetrically folded and item aligned patterns of preferences creating head to head competition between two agents reminiscent of the concept of a maverick

information and conspiracy in sealed bid auctions abstract this paper examines the allocative properties of the sealed bid institution when different aspects of the available information to bidders are considered specifically we examine a the effect on price determination in repeated sealed bid auctions of post auction revelation of losing bids and b the effect on price determination when conspiratorial discussions are allowed

the political economy of transition the overriding importance of political constraints in the transition process has led to developments of the theory of the political economy of reform what are the main insights from that theory how does it reflect the transition reality what have we learned and what do we still need to learn the present article will attempt to answer those questions

seller beware supply and demand reduction and price manipulation in multiple unit uniform price auctions we experimentally compare under revelation of supply and demand across alternative variations of ascending and descending two sided price clock auctions we find that buyers reduce demand more when the price is ascending but sellers behavior is consistent across clock directions as a result the clock price rule has empirical effects on efficiency even though it is theoretically neutral

the aggregate effects of sectoral reallocations abstract can a one time permanent change in the fundamentals behind the sectoral composition of the economy prompt an aggregate downturn can this downturn be non negligible even if one uses us data to determine the relative size of gross vs net job flows and the importance of job creation costs can one consider the military build down of the 1990s as a plausible cause for the 1990 1991 recession do sectoral reallocations generate responses that are qualitatively similar to productivity shocks we use a variant of the mortensen pissarides 1994 review of economic studies 61 397 415 job creation destruction model calibrate it to us labor market data and run experiments that suggest one can answer yes to all these questions

collusion in private value ascending price auctions we investigate the effects of bid improvement rules and bidder value asymmetry on bidder collusion in experimental ascending price auctions without communication we find that the strict bid improvement rule and private values are not always sufficient to break collusion among well motivated bidders collusion still occurs as long as bidder gains from collusion are high

the interaction effect of rivalry restraint and competitive advantage on profit why the whole is less than the sum of the parts rivalry restraint based theoretical mechanisms predict that an industry s profits will increase when its firms engage in less price competition or less direct competition with each other competitive advantage based theoretical mechanisms predict that a firm s profits will increase when it creates superior economic value that direct and indirect competitors cannot fully compete away but what is the interaction effect on profit of simultaneously restraining rivalry and increasing competitive advantage do they positively amplify reinforce each other or negatively dampen undermine each other this paper s theoretical model predicts a negative interaction effect with potentially significant implications for theory practice and pedagogy

brokers and competitive advantage the broker profits by intermediating between two or more parties using a biform game we examine whether such a position can confer a competitive advantage as well as whether any such advantage could persist if actors formed relations strategically our analysis reveals that if one considers exogenous the relations between actors brokers can enjoy an advantage but only if 1 they do not face substitutes either for the connections they offer or the value they can create 2 they intermediate more than two parties and 3 interdependence does not lock them into a particular pattern of exchange if on the other hand one allows actors to form relations on the basis of their expectations of the future value of those relations then profitable positions of intermediation only arise under strict assumptions of unilateral action we discuss the implications of our analysis for firm strategy and empirical research

on evaluation costs in strategic factor markets the implications for competition and organizational design this paper uses a formal model to study how evaluation costs affect competition for resources in strategic factor markets it finds that relative scarcity may not always benefit resource sellers rather when competition among resource investors passes a certain threshold intensity miscoordination among investors increases to the point that sellers expected profits decline this paper extends the model to consider how investors organize to overcome managerial agency in resource evaluation two organizational designs are considered a incentivization wherein a lower level manager is motivated by an incentive contract to evaluate resources for an investor and b supervision wherein evaluation is either handled directly or closely monitored by headquarters the model suggests that competition among investors will be associated with a greater use of supervision and that investors using supervision will tend to make lower offers this paper also finds that supervision will be more common when valuable resources are rare this paper was accepted by bruno cassiman business strategy

auction institutional design theory and behavior of simultaneous multiple unit generalizations of the dutch and english auctions historically english and dutch auctions have been used for the exchange of single objects such as works of art or single lots of a good such as produce fish or cut flowers where these institutions have been used for the exchange of multiple units such as the australian wool auction using english rules successive lots of the good are sometimes sold sequentially at auction in some but not all instances this is because the goods are not identical even though the various lots may be close substitutes see penny burns 1985 where the goods are accepted universally as being homogeneous as in the securities markets multiple units are often commonly auctioned simultaneously in the securities industry orders are batched for simultaneous execution in multiple unit auctions in what are referred to as call markets that is the security is called for auction at a particular point in time this type of market is used on the stock exchanges of austria belgium france germany and israel some of these are verbal and some are sealed bid auctions although the u s organized exchanges are predominantly continuous rather than call markets except that call markets are used each day to open trading in each listed security there is a growing number of exceptions such as the proliferation since 1984 of auction preferred stock goldman sachs and co october 1984 and money market preferred stock lehman brothers july 1984 we now have dutch auction rate transferable securities called darts stated rate auction preferred stock or straps and many more after the initial subscription offering of this type of security the market is called every 49 days to reset the preferred dividend rate using a multiple unit auction the exchange of shares and the dividend determination is based on the array of stated dividend rates at which existing holders and potential new holders are willing to sell and or buy corresponding quantities the dividend rate and exchange of shares every 49 days is executed using the uniform price or competitive sealed bid mechanism vernon l smith et al 1980 the discussion to follow will be confined to this sealed bid form of the call market call markets provide temporal consolidation of trade orders or other forms of expressing the desire to buy and sell by comparison with continuous trading call markets offer both advantages and disadvantages robert a schwartz 1988 pp 442 6 the cited advantages include low cost of operating the exchange information aggregation and presumed pricing efficiency price stability individual trades which are thought to have a small impact on price reduced price uncertainty and finally nondiscriminatory pricing however there are offsetting disadvantages 1 the market is inaccessible except at the time of call 2 no bid offer contract or price information is available until the results of the call are announced and 3 there is transaction uncertainty because a submitted bid offer may be too low high to execute inside the supply demand cross these conditions are only partially alleviated if there is a secondary market between calls these disadvantages may be significant in september 1988 the wall street journal published an article on the failure of a call market for the auction rate preferred stock economic science laboratory university of arizona tucson arizona this material is based upon work supported by the national science foundation under grant no ses 8320121

combinatorial clock auctions price direction and performance abstract the lack of price guidance towards efficiency relevant packages in ascending combinatorial clock auctions acca can lead to a low efficiency allocation of goods we propose a descending price combinatorial clock auction dcca with a newly devised pricing strategy to improve on this problem using agent based simulations we document that the dcca provides significant improvements over the acca and we are able to understand in which environments these improvements are likely to be the strongest we test these predictions in the laboratory with human subjects and find evidence that the dcca generates improvements in auction efficiency and revenue

competitive intensity and its two sided effect on the boundaries of firm performance the new perspective emerging from strategy s value capture stream is that the effects of competition are twofold competition for an agent bounds its performance from below while that for its transaction partners bounds from above thus assessing the intensity of competition on either side is essential to understanding firm performance yet the literature provides no formal notion of competitive intensity with which to make such assessments rather some authors use added value as their central analytic concept others the core added value is simple but misses the crucial for an agent side of competition the core is theoretically complete but difficult to interpret and empirically intractable this paper formalizes three increasingly general notions of competitive intensity all of which improve on added value while avoiding the complexity of the core we analyze markets characterized by disjoint networks of agents e g supply chains providing several insights into competition and new tools f

common pool resources with free mobility i introduction to date most of the experimental research on common pool resources cpr has been concerned with the overexploitation problem within one community several studies as in casari and plott 2003 visser 2006 and fehr and gachter 2000 emphasize that mutual monitoring and sanctions against excessive use and free riding can be welfare improving in cpr and public good settings furthermore ostrom 1990 and others highlight the importance of clearly defined boundaries for successful self governance in the commons however in and out population migration may be a significant factor in resource use across communities examples include international fisheries or pastureland under extensive grazing the purpose of this study is to consider the effect of migratory pressure on such mobile commons in this article we relax the assumption of no entry and study how an agent s free mobility between communities affects resource use population migration is free in the tiebout 1956 sense we assume that agents mobility is costless our work differs from previous research in that it addresses the mobility issue by looking at multiple localities each with a cpr under either sanctions or open access regime we compare resource extraction behavior under different resource use regimes sanctions vs no sanctions using laboratory experiments conducted in two countries the united states and mongolia examples of commons with multiple locations are widespread in national and world economies extensive livestock production prevalent in mongolia kyrgyzstan niger and mali relies on low forage value grassland which requires movement of herders over large territories subsuming many localities similarly fisheries around international waters involve resource use problems across many localities or even countries for instance pink salmon in the north east pacific is harvested in canadian american and russian waters some localities may have regulations such as sanctions to promote the efficient use of the resource whereas others are still unregulated the alaskan salmon fisheries in chignik were governed at certain times by a cooperative fleet that shared catch equally among members and at other times by an independent fleet in such a way that unregulated fishermen were free to join cooperatives as studied in deacon parker and costello 2008 in new england users move among separately managed resources such as groundfish shellfish and baitfish within single political jurisdictions to reflect the high mobility aspect of such settings we extend the existing experimental laboratory research on cpr to allow for two communities in which citizens are free to choose the place to extract the resource in each community there is a territory with resources for harvesting activity we consider two possible community management regimes for each locality a unregulated community with no rules toward the grazing activity and b decentralized sanctioning mechanism as studied in casari and plot 2003 we consider this sanctioning system as an example of an institution that has a historical precedence and that has been shown to restore the efficiency of the common properties in closed communities the research questions are how does free mobility affect the performance of the sanctioning system if one locality is regulated and the other is not would the sanctioning institution withstand the migratory pressure from the unregulated locality how does the difference in a management regime affect agents decisions on which locality to join we address these questions in an experimental two community cpr framework where participants make decisions regarding the location to harvest and the harvesting level moreover we compare the setting with exogenously imposed institutions to a setting where the institutions in each locality are chosen by majority voting this comparison allows us to consider differences between representative democracy and direct democracy

collusion and the choice of auction auctions are used in many different markets including the leasing of a substantial fraction of the natural resources in the united states the procedures used in the auctions conducted by the federal government have been a continuing source of controversy one of the concerns has been the possibility of collusion among bidders this article shows that cartels are stable if the seller uses open ascending bid oral auctions but not if he uses sealed high bid auctions this may help to explain the frequent use of sealed high bid auctions

the opportunity for conspiracy in restraint of trade an experimental study a study is a limited exploration into the relationship between the opportunity for conspiracy in restraint of trade and the resulting market performance laboratory experimental methods are applied to separate competing theories the competitive model predicts well relative to cartel models nevertheless when measurements are taken relative to the performance of markets where conspiracies are not possible the effects of attempted conspiracies can be determined

bargaining ability and competitive advantage empirical evidence from medical devices in markets where buyers and suppliers negotiate supplier costs buyer willingness to pay and competition determine only a range of potential prices leaving the final price dependent on other fac

returns to human capital under uncertain reform good guys finish last abstract this paper models the career decisions of agents heterogeneous in their ability facing the possibility of future drastic changes e g reforms affecting the demand for different professions supposing that the uncertainty arises after educational choices have been made by the cohort of agents we analyze their response to it depending on ability and educational attainment we show that the more able individuals tend to stay in their original profession while their less able counterparts are more likely to switch to an alternative occupation if reform does take place the more able agents will be forced to change careers since they switch late they miss the benefits of learning by doing this adverse selection has important implications for the analysis of labor allocation during transition from central planning to markets in particular it lowers productivity in the emerging market occupations reducing the benefits of reforms

creating and capturing value in repeated exchange relationships the second paradox of embeddedness prior empirical studies suggest repeated exchange develops increasing value in buyer supplier relationships a first order implication of this finding is that buyers will concentrate exchange among a relatively small number of suppliers to generate maximum value in relationships however buyers are equally concerned with value capture by distributing rather than concentrating exchange buyers may position themselves to capture more of the value created leaving buyers potentially conflicted concerning the choice we label this dynamic the second paradox of embeddedness distinguishing it from uzzi s uzzi b 1997 social structure and competition in inter firmnetworks the paradox of embeddedness admin sci quart 42 1 35 67 paradox driven by technological uncertainty by examining the procurement activities of a large diversified manufacturing company we then test for supplier and buyer behavior consistent with the conditions that give rise to the second paradox and behaviors that result from it

side communication yields efficiency of ascending auctions the two items case we analyze an ascending auction with anonymous item prices when there are two items that are substitutes this popular auction format entails increased opportunities for bidders to coordinate bids as the bidding process is longer and since bidders see the other bids and can respond to various signaling this has happened in many real auctions e g in the netherlands 3g telecom auction and in the fcc auctions in the us

borrow and adjust fiscal policy and sectoral adjustment in an open economy should the government run fiscal deficits in response to an adverse external shock that warrants transfer of resources from production of nontraded to traded goodsq this article considers normative fiscal policy implications of sectoral adjustment costs in a two sector model with overlapping generations fiscal deficits benefit present generations by depleting foreign assets and slowing down the adjustment process we show that despite no nominal rigidities temporary fiscal deficits increase social welfare if adjustment costs prevent immediate sectoral reallocation of inputs if there are no adjustment costs the case for fiscal deficits vanishes copyright 2003 by the economics department of the university of pennsylvania and osaka university institute of social and economic research association

collusive practices in repeated english auctions experimental evidence on bidding rings the repeated meeting of buyers at english auctions where multiple units are sold is a common occurrence the art auctions at sotheby s christie s and other prestigious auction houses are attended by a regular group of institutional buyers more mundanely the same taxicab buyers meet at vehicle auctions for used police cars jon p nelson 1995 commission order buyers attend the same livestock and agricultural commodity auctions these buyers may be agents for multiple meat processors u s department of agriculture grain inspection packers and stockyards administration 2001 the 1946 american tobacco antitrust case american tobacco co et al v united states 328 u s 781 1946 is a well known account of how buyers of tobacco operated to hold down the price of auctioned leaf tobacco at various sites buyers for the big three cigarette manufacturers had developed facilitating practices that helped them purchase raw tobacco at relatively low prices these buyers voluntarily restricted themselves to attend the same auctions buyers were aware of the amount of leaf and the tobacco grades available at auction sites they had instructions from the cigarette makers on the highest bid prices they could pay and communication among these buyers seemed evident from a coordinated practice of buying low grade tobacco that was not used by the makers in the sale of livestock cattle producers have claimed that packer buyers act to hold down cattle prices at the auction site there are a few large processors who give their agents buy orders these orders along with further communication between the processor and agent instruct the agent on the number of cattle to purchase during a given week and provide a schedule of prices they can pay for varying types of cattle some agents represent more than one processor or packer and therefore have multiple buy orders agents repeatedly meet each other at regional cattle auctions they may not be the only buyers but they are the largest purchasers of slaughter cattle brought to market and at most auction sites have substantial monopsony power this paper documents the impacts of several practices that may facilitate low sale prices when multiple units are sold at repeated english auctions laboratory english auction markets are created the number of symmetric buyers attending the auction is either six or two with total demand in these two environments held constant the six buyer market is intended to represent a relatively competitive environment while auctions with two buyers represent rivalry with substantial monopsony power held by each agent we use these two market environments to study how selected treatments or facilitating influences affect the behavior of buying agents the six buyer market generally is viewed as a control for comparison to the dominant twobuyer environment but very collusive behavior may be observed in the six buyer auctions depending upon market practices phillips department of economics and finance university of wyoming p o box 3985 laramie wy 82071 e mail owenphil uwyo edu menkhaus department of agricultural and applied economics university of wyoming p o box 3354 laramie wy 82071 e mail menkhaus uwyo edu coatney u s department of agriculture grain inspection packers and stockyards administration competition branch aurora co 80011 e mail kalyn t coatney usda gov this work has been supported by the u s department of agriculture under grant numbers usdagipsnc5418 and usdag00354009126 the findings and conclusions expressed in this paper are those of the authors and do not necessarily reflect the views of the funding agency 1 these are regional auctions houses where slaughter cattle primarily cull cows and fed steers and heifers and feeder cattle are sold cull cows are animals taken out of a herd and slaughtered because of age inability to produce calves or reduced milk production concerns regarding slaughter cow possessors sharing common purchasing agents have been raised in assessment of the cattle and hog industries calendar year 2000 u s department of agriculture grain inspection packers and stockyards administration june 2001

low revenue equilibria in simultaneous ascending bid auctions low revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market these outcomes are generated as perfect equilibria of ascending bid multiunit auctions we show that these equilibria are possible under mild conditions conditions that are likely to prevail in many situations where auction formats have recently been adopted we argue that these equilibria could explain the low revenues of some recent auctions and discuss potential remedies to eliminate low revenue equilibria