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

the efficiency of indirect taxes under imperfect competition abstract this paper considers the relative efficiency of ad valorem and unit taxes in imperfectly competitive markets we provide a simple proof that ad valorem taxes are welfare superior to unit taxes in the short run when production costs are identical across firms the proof covers differentiated products and a wide range of market conduct cost asymmetries strengthen the case for ad valorem taxation under cournot competition but unit taxation may be welfare superior under bertrand competition with product differentiation ad valorem taxation is superior with free entry under cournot competition but not necessarily under price competition when consumers value variety

price leadership and discrimination in the european car market this paper explains differences in the price of the same good in different markets in the authors model n producers each play the role of stackelberg leader on their own market and there is one market with no domestic producer the authors show that even without demand differences between markets pretax prices will be higher on markets where there are high cost domestic producers and where taxes are low evidence from the european car market based on time series for individual models supports these results furthermore as the model suggests exchange rate changes are not passed through to car prices copyright 1990 by blackwell publishing ltd

stackelberg versus cournot oligopoly equilibrium abstract we compare an m firm cournot model with a hierarchical stackelberg model where m firms choose outputs sequentially the stackelberg equilibrium price is lower so output and total surplus are higher total profits are lower while the first mover in a stackelberg duopoly earns more than a cournot duopolist this is not necessarily true for m 2 we find a surprisingly simple relation which determines whether cournot profit exceeds the stackelberg leader s finally we consider a game with firms choosing whether to reveal their outputs which includes stackelberg and cournot as possible outcomes the equilibrium is stackelberg

stackelberg and marshall this paper advocates a generalized n firm stackelberg model as a plausible testable alternative description of oligopoly a pure strategy equilibrium must exist for this model the main result is that efficiency obtains in the limit as the scale of each firm is shrunk relative to demand this is demonstrated for the case of u shaped average cost and also for that of natural monopoly copyright 1990 by american economic association

srisk a conditional capital shortfall measure of systemic risk we introduce srisk to measure the systemic risk contribution of a financial firm srisk measures the capital shortfall of a firm conditional on a severe market decline and is a function of its size leverage and risk we use the measure to study top financial institutions in the recent financial crisis srisk delivers useful rankings of systemic institutions at various stages of the crisis and identifies fannie mae freddie mac morgan stanley bear stearns and lehman brothers as top contributors as early as 2005 q1 moreover aggregate srisk provides early warning signals of distress in indicators of real activity received june 7 2011 accepted april 18 2016 by editor geert bekaert

innovation imitation and social welfare this paper focuses on the impact of competition by imitation more specifically copying for innovative activity and social welfare in part it is a response to recent empirical work 10 12 that has tried to measure the relationship between innovation and imitation costs these papers include a direct call for theoretical modeling that takes explicit account of such cost relationships and we try to answer this challenge specifically we examine the implications for product quality and social welfare when innovators anticipate that a successful product will be copied by rivals obviously previous empirical research is not the only source of interest in these issues the potential effects of imitation on innovative activity have long been both a theoretical and practical concern in recent years a variety of authors have addressed the appropriability issue raised by imitation and its implications for innovative activity 4 7 2 there has also been work on explicit copying i e photocopying 8 11 in the policy arena the protection of product design and intellectual property rights is the focus of much recent actual and proposed u s legislation and a major issue in the uruguay round of trade talks 1 21 our analysis of this topic differs from that of previous work in a number of important respects first we focus explicitly on product as opposed to process innovations second and perhaps even more important we do not restrict the firm s choice to be to innovate or not to innovate instead we allow the innovator to choose what kind or quality of new good to introduce into the market the higher the quality the higher is the development cost third when the innovating firm decides what kind of new product to market it does so under uncertainty about demand the popularity of the new product is not known until after the innovator has chosen the level of quality and sunk its product development costs fourth at the initial time at which the innovator chooses the quality of product to develop it does so with the knowledge that its innovation if it is popular will be copied by later rival entrants finally in direct response to the empirical work mentioned above we explicitly focus on the ratio of imitation to innovation costs our approach yields a number of insights not the least of which is a more precise identification of the potential gains and losses from imitative competition indeed using a quadratic development cost function we explicitly calculate the impact of copying on social welfare this explicit welfare analysis further distinguishes our analysis from most previous work

dynamic programming approach to discrete time dynamic feedback stackelberg games with independent and dependent followers stackelberg games play an extremely important role in such fields as economics management politics and behavioral sciences stackelberg game can be modelled as a bilevel optimization problem there exists extensive literature about static bilevel optimization problems however the studies on dynamic bilevel optimization problems are relatively scarce in spite of the importance in explaining and predicting some phenomena rationally in this paper we consider discrete time dynamic stackelberg games with feedback information dynamic programming algorithms are presented for the solution of discrete time dynamic feedback stackelberg games with multiple players both for independent followers and for dependent followers when the followers act dependently the game in this paper is a combination of stackelberg game and nash game

sequential lottery contests with multiple participants abstract we apply aggregative games techniques in a novel fashion in the analysis of sequential lottery contests with n players to show that there exists a unique subgame perfect equilibrium in pure strategies

quantity leadership and social inefficiency a game of simultaneous free entry and sequential output choices is analyzed firms enter simultaneously in stage 1 by paying a fixed cost and they choose output levels sequentially in subsequent stages at the subgame perfect equilibrium of the game the production level of a firm is decreasing with the order of the firm in the decision making the firm that is the last to choose output produces the same amount as a typical firm in the standard symmetric simultaneous moves cournot game moreover industry output and market price are identical in the sequential and the symmetric cournot games it follows that in the sequential game there are fewer active firms and higher total surplus than in the standard symmetric cournot game strategic asymmetry results in higher concentration and higher total surplus without an increase in price

stackelberg versus cournot a differential game approach abstract we propose an infinite horizon differential oligopoly game where at each point in time m stackelberg leaders and n m stackelberg followers exploit a common pool renewable resource and sell their harvest in the marketplace at a price that depends on total harvest we derive a feedback generalized stackelberg nash cournot equilibrium a generalization of the feedback stackelberg equilibrium nesting feedback stackelberg and feedback cournot as special cases we proceed with a comparison between the feedback stackelberg and the feedback cournot equilibria and find a number of interesting results in contrast with static oligopoly theory as to the relative efficiency of the two equilibria we show that the cournot equilibrium can be more efficient than the stackelberg equilibrium this holds true in the short run at the steady state and in terms of discounted welfare

second mover advantage and price leadership in bertrand duopoly we consider the issue of first versus second mover advantage in differentiated product bertrand duopoly with general demand and asymmetric linear costs we generalize existing results for all possible combinations where prices are either strategic substitutes and or complements dispensing with common extraneous and restrictive assumptions we show that a firm with a sufficiently large cost lead over its rival has a first mover advantage for the linear version of the model we invoke a natural endogenous timing scheme coupled with equilibrium selection according to risk dominance the analysis yields as the unique equilibrium outcome sequential play with the low cost firm as leader

a stochastic multiple leader stackelberg model analysis computation and application we study an oligopoly consisting of m leaders and n followers that supply a homogeneous product or service noncooperatively leaders choose their supply levels first knowing the demand function only in distribution followers make their decisions after observing the leader supply levels and the realized demand function we term the resulting equilibrium a stochastic multiple leader stackelberg nash cournot sms equilibrium we show the existence and uniqueness of sms equilibrium under mild assumptions we also propose a computational approach to find the equilibrium based on the sample average approximation method and analyze its rate of convergence finally we apply this framework to model competition in the telecommunication industry

a stochastic version of a stackelberg nash cournot equilibrium model we consider a stochastic version of the stackelberg nash cournot model proposed by murphy et al 1983 ln the first stage the leader chooses and announces his production level taking into account the reaction of the followers the decision of the leader is taken when market demand is uncertain in the second stage the followers knowing the leader s output react to this level according to the cournot assumption at this stage demand is known we study the extension of the murphy et al model and give a numerical illustration of this model using the european gas market

a theory of market structure with sequential entry this article sets out a theory of market structure with sequential entry we characterize the perfect nash equilibrium to the entry game in several propositions first equilibria never involve excess capacity second a sufficient statistic for the entry of any firm is that its profits are positive when computed myopically i e with no further entry third the equilibrium number of firms is the smallest number that can deter entry fourth aggregate output in equilibrium is no smaller than the limit output we calculate some explicit solutions to the model and examine comparative static properties

economic choice political decision and the problem of limits assesses the arguments for the use of market or political processes for making collective choices the border between what is mine and what is ours is contested but it is unguarded where should it lie how would we know when it should be adjusted i uncover an old paradox a society can never use political means to guard against incursions across the border for political ends some other mechanism such as constitutional or other extra statutory rules are required

stackelberg versus cournot equilibrium we reconsider stackelberg s classical critique of the cournot duopoly in the framework of endogenous timing for two player games for quantity duopoly we provide different sets of minimal conditions directly on the demand and cost functions yielding respectively the simultaneous and the two sequential modes of play while our findings essentially confirm the predominance of the former they also indicate that the latter is natural under some robust but restrictive conditions no extraneous assumptions such as concavity existence or uniqueness of equilibria are needed and the analysis makes crucial use of the basic results from the theory of supermodular games classification numbers b21 c72 d43 l13 c 1999 academic press

endogenous sequencing of firm decisions abstract when firms are symmetrically informed a stackelberg leader prefers to be leader rather than a cournot duopolist however when the leader has superior information about demand the leader may earn lower ex ante profits than it would earn if it was choosing quantities simultaneously with the follower in this paper i give the firm with superior information the option of delaying its quantity decision until the decision period of the less informed firm so that decisions are made simultaneously surprisingly in the unique stable outcome the informed firm moves first regardless of its private information journal of economic literature classification numbers c72 c73 d82 l10

von stackelberg and cournot duopoly choosing roles under what circumstances will firms agree on the choice of roles of leader and follower in the von stackelberg duopoly model a key determinant is the slope of the firms reaction function in either price or quantity space the duopolists will disagree over the choice of roles if they have downward sloping reaction functions each will prefer to be the leader they will also disagree if they have upward sloping reaction functions and similar profit functions each will prefer that the other be the leader preferences between von stackelberg and cournot outcomes are also considered

endogenous preemption on both sides of a market abstract we study a market in which both buyers and sellers can decide to preempt and set their quantities before market clearing will this lead to preemption on both sides of the market only one side of the market or to no preemption at all we find that preemption tends to be asymmetric in the sense that it is restricted to only one side of the market buyers or sellers

on noncooperative oligopoly equilibrium in the multiple leader follower game abstract in this paper we provide new proofs of existence and uniqueness of a stackelberg market equilibrium for a multiple leader follower noncooperative oligopoly model in which heterogeneous firms compete on quantities to this end we consider a two stage game of complete and perfect information in which many leaders interact strategically with many followers the stackelberg market equilibrium constitutes a pure strategy subgame perfect nash equilibrium of this game existence and uniqueness are more difficult to handle in this framework insofar as the presence of several leaders and followers displays a richer set of strategic interactions then to prove existence we notably provide a new procedure to determine the conditions under which the optimal behavior of the followers may be written as functions of the sole strategy profile of the leaders some examples outline our procedure and discuss our assumptions

subscription of shares abstract the paper studies share subscription schemes and claims that these schemes are useful when it is desirable to let an item be held or a project be undertaken by a group of bidders examples of such instances include the privatization of state owned enterprises the introduction of strategic investors the procurement of large government construction projects the issuance of treasury bills and the resolution of the banks toxic assets i show that these share subscription schemes result in sale prices that do approach the fundamental value as the number of bidders increases this is in contrast to share auctions in wilson 1979 in which the nash equilibrium sale price can yield a significantly lower sale price than a unit auction

sequential entry industry structure and welfare in this paper we reexamine the relationship between potential competition industry structure and welfare in a market subject to a sequential entry threat where firms can make quantity commitments and have access to a constant returns technology it is shown that provided entry is not blockaded the incumbent s will either prevent entry or allow all the potential entrants in furthermore actual entry may decrease but social welfare never goes down with more potential entrants nevertheless with a finite number of potential entrants policies which lower the cost of entry need not be beneficial in welfare terms

agent based modeling public choice and the legacy of gordon tullock the future of modeling in public choice may be glimpsed by examining its evolution in economics for problems that are influenced by heterogeneity of actors social networks or emergence the arising of a complex system from simple phenomena such as adam smith s invisible hand economists increasingly are turning to agent based modeling agent based modeling is a form of computational analysis that focuses on agents rather than on aggregates in his long career as a founding scholar of public choice gordon tullock repeatedly followed the agent oriented approach of methodological individualism many of tullock s models are thus highly amenable to further exploration using that method as agent based modeling becomes more and more popular the importance of tullock s work will continue to grow

endogenous role in mixed markets a two production period model in this paper i investigate endogenous roles in a mixed duopoly where private and state owned public firms compete by allowing two production periods i find that many equilibria exist including the cournot type equilibrium and one stackelberg type equilibrium where the public firm becomes the follower however another stackelberg type equilibrium where the public firm becomes the leader does not exist if small inventory costs are introduced the unique equilibrium outcome becomes the stackelberg type where the public firm is the follower

capital shortfall a new approach to ranking and regulating systemic risks the financial crisis of 2007 2009 has given way to the sovereign debt crisis of 2010 2012 yet many of the banking issues remain the same we discuss a method to estimate the capital that a financial firm would need to raise if we have another financial crisis this measure of capital shortfall is based on publicly available information but is conceptually similar to the stress tests conducted by us and european regulators we argue that this measure summarizes the major characteristics of systemic risk and provides a reliable interpretation of the past and current financial crises

sequential rent seeking we consider n firms which choose rent seekingexpenditures sequentially each player anticipatingthe rent seeking expenditures that will be made bylater movers we find that the earlier movers need notmake larger profits than later movers and thataggregate profits are lower than in a game in whichfirms make simultaneous moves

contestable markets an uprising in the theory of industry structure presents a transcript of the presidential address delivered at the 94th meeting of the american economic association on december 29 1981 discussion of developments in the theory of industry structure welfare attributes of contestable markets behavior characteristics of oligopoly equilibrium intertemporal vulnerability to inefficient entry ebsco

on the status of the nash type of noncooperative equilibrium in economic theory in economic theory the nash type of noncooperative equilibrium is a widely used equilibrium concept nevertheless the concept is frequently misunderstood and misleading explanations and interpretations are often given this paper presents a sample of such frequently appearing misleading explanations and goes on to explain why they are misleading the case for using the nash noncooperative equilibrium concept is stronger than what is implied by the many misleading statements found in the literature a basic issue is whether it can be argued that decisions in accordance with the noncooperative equilibrium theory are individually rational decisions this issue is not covered by the classical rationality postulate in economic theory this problem is tackled by stating certain postulates which may be taken as defining individual rationality in situations of noncooperative interaction it is shown that nash behavior satisfies these postulates

stackelberg equilibria in managerial delegation games abstract managerial compensation packages do not only influence managers behavior but also have an impact on competing firms in a managerial delegation game investigating the latter aspect it is shown that the inherent prisoner s dilemma situation can be resolved without changing the normally studied setup or timing in the first stage owners choose an incentive function for their managers in the second stage they choose the weights assigned to that function besides profits and in the third stage managers play a cournot game solving this continuous optimization problem with the implicit function theorem shows that choosing an incentive from the set of multiplicative incentives i e any generalized affine transformation of the product of both firms quantities which includes e g relative profit ensures that the stackelberg outcome is among the set of equilibrium outcomes furthermore it is the unique outcome if the rival owner opts for one of the well known incentives like sales revenue or market share the general approach used allows demonstrating that with no other linear incentive a stackelberg outcome results and that incentives like profit to cost ratio should be avoided selecting a multiplicative incentive is a dominant strategy of the game

a multiple leader stackelberg model and analysis this paper presents a new multiple leader follower model that is a consistent extension of stackelberg s leader follower duopoly the development contrasts with other existing extensions by demonstrating how the leader firms can utilize the true reaction curve of the follower firms it also provides sufficient conditions for some useful convexity and differentiability properties of this function for the proposed model we conduct a static analysis and discuss the existence uniqueness and computation of an equilibrium solution as well as study certain issues regarding the relative profits of leader and follower firms since the cournot oligopoly and the stackelberg leader follower models are special cases of this model the analysis in this paper hopefully provides some further insights about these types of models

cournot vs walras a reappraisal through simulations abstract best reply behavior in cournot oligopolies generally leads to cournot nash equilibrium but imitative behavior selects the walrasian equilibrium as the unique stochastically stable state previous work alos ferrer 2004 showed that in the presence of memory imitative behavior leads to a non trivial dynamics selecting all quantities between the cournot and walrasian outcomes however the scope of previous results was limited to specific assumptions on demand and cost functions and did not provide information on the shape of the distribution of outcomes we use computational simulations to address these limitations we show that the selection result for non trivial memory holds beyond the set of well behaved cournot games previously analyzed further we find that in cournot games the limit distribution of long run outcomes is highly skewed towards the walrasian quantity although longer memory increases the importance of the cournot equilibrium the competitive outcome remains the dominant prediction

measuring financial asset return and volatility spillovers with application to global equity markets we provide a simple and intuitive measure of interdependence of asset returns and or volatilities in particular we formulate and examine precise and separate measures of return spillovers and volatility spillovers our framework facilitates study of both non crisis and crisis episodes including trends and bursts in spillovers and both turn out to be empirically important in particular in an analysis of sixteen global equity markets from the early 1990s to the present we find striking evidence of divergent behavior in the dynamics of return spillovers vs volatility spillovers return spillovers display a gently increasing trend but no bursts whereas volatility spillovers display no trend but clear bursts

perfect competition as the limit of a hierarchical market game abstract it is shown that competitive equilibrium can be seen as the limit of some hierarchical game in which the rights or information of the players can be strictly ordered

endogenous timing with infinitely many firms abstract a model with constant marginal costs is considered where firms choose first a period for production and then the amount to produce when competing in the market according to the resulting timing decisions multiple equilibria arise allowing for infinitely many industry output configurations encompassing one limit output dominant firm and the cournot equilibrium with free entry as extreme cases at each of these equilibria a firm produces a positive amount only if this firm commits to produce at period one both stackelberg and cournot like outcomes are sustainable as equilibria however when the number of leaders is given production at subsequent periods is always prevented and industry output is sometimes larger than the entry preventing level

price and quantity competition in homogeneous duopoly markets abstract a noncooperative duopoly game is formulated in which the quantity player sells its entire amount up to consumer demand while the price player supplies residual demand both firms transact at the same price depending on the ordering two stage subgame perfect equilibria are equivalent to simultaneous price and quantity nash equilibria or include also the stackelberg equilibrium in any case a firm prefers to be the quantity player

quantity setting oligopoly with endogenous sequencing abstract this paper investigates endogenous sequencing in a quantity setting oligopoly i formulate an n firm m period model where each firm chooses both how much to produce and when to produce it i find that at least n 1 firms simultaneously produce in the first period in every pure strategy equilibrium this result shows that the generalized stackelberg type outcome never appears in equilibrium except in a duopoly

spillovers between the oil sector and the s p500 the impact of information flow about crude oil crude oil is one of the most important commodities in the real economy and as such the relationship between oil prices and broader equity markets has attracted a lot of research attention recent work has considered directional spillovers or links between oil and equity markets in recent times there has been a growing body of research into the impacts of news and media attention on asset returns both in the context of and in particular with both the oil and equity markets but also within each of these this paper considers how news or information flows about crude oil influence the spillover links between these assets using realized volatility estimates based on high frequency data the empirical analysis reveals a number of novel results in terms of the behavior of these linkages increased news flow about oil reduces the impact of the broader equity market on the oil sector implying that it is driven more by oil specific shocks and less by more general financial market conditions it also increases the impact of the oil sector on the broader equity market these results have potential implications for hedging and portfolio allocation

stackelberg nash cournot equilibria characterizations and computations the supply side of an oligopolistic market supplying a homogeneous product noncooperatively is modeled in this market there is one leader and n followers the followers operate under the cournot assumption of zero conjectural variation and are accordingly called cournot firms the leader called a stackelberg firm specifically takes into account the reaction of the cournot firms to its output for this situation we study the behavior and implications of the joint cournot reaction curve as generated by plausible economic market assumptions in particular we study the existence and uniqueness of a stackelberg nash cournot equilibrium in addition we prescribe an efficient algorithm to determine a set of equilibrating output quantities for the firms

endogenous timing in the presence of non monotonicities the aim of this paper is to generalize the endogenous timing game proposed by hamilton and slutsky games and economic behavior 1990 2 pp 29 46 by allowing the payoff or the marginal payoff of a player to become non monotonic with respect to the strategy of the opponent we propose a taxonomy of the subgame perfect nash equilibria based on the characteristics of the payoff functions proposed by eaton canadian journal of economics 2004 37 pp 805 29 we determine under which conditions of the initial payoff functions commitment has a social value and when the simultaneous move nash equilibrium is commitment robust and discuss its pareto efficiency

delegation market share and the limit price in sequential entry models abstract we construct a model of equilibrium market structure with sequential entry in which firms have u shaped average cost curves the equilibrium is characterized completely in the case of linear demand and quadratic costs in particular the trade off between the incentive to delegate the costs of entry deterrence and the market share advantages of investment by early entrants is fully determined we determine the circumstances under which delegation occurs whether firms delegated the task of entry deterrence find it costly or not is shown to depend in a parametric way on the limit price we show that the strategic equilibrium is socially inefficient relative to the free entry cournot equilibrium

irrationality and monopolistic competition an evolutionary approach this paper shows that a monopolistically competitive equilibrium can evolve without purposive profit maximization specifically this paper formulates a precise evolutionary dynamic model of an industry where there is continuous entry of firms that randomly select their output levels on entry and fix their output levels thereafter firms exit the industry if they fail to pass the survival test of making nonnegative wealth this paper shows that the industry converges in probability to the monopolistically competitive equilibrium as the size of each firm becomes infinitesimally small relative to the market as the entry cost becomes sufficiently small and as time gets sufficiently large consequently in the limit the only surviving firms are those producing at the tangency of the demand curve to the average cost curve and no potential entrant can make a positive profit by entry

contestable markets an uprising in the theory of industry structure comment a situation traditionally identified as conducive to imperfect competition is when average costs decline and the cheapest scale of production is large relative to the size of the market however some of the more recent literature on industrial organization has emphasized a supposed distinction between fixed costs of production and sunk costs of production a point frequently made is that while the possibility of sunk costs can create genuine barriers to entry pure fixed costs per se do not inhibit competitive market performance this approach finds its logical extreme in the norm or abstraction of perfect contestability perfect contestability is essentially a theory of the polar case of frictionless entry and exit as william baumol stated a contestable market is one into which entry is absolutely free and exit is absolutely costless p 3 certainly this is the most reasonable interpretation of a situation where potential entrants feel free to disregard an incumbent s price response suppose every potential and actual producer has access to the same technology in a perfectly contestable market there are no set up or shut down losses the main result is that even with declining average costs of production the incumbent firm does not dare to post a price higher than average cost price above cost invites being undercut by a hit and run shadow entrant capable of producing at the same flow rate and at identical unit cost during just the briefest instant of time i argue that this line of reasoning is misleading perfect contestability gets around the problem of increasing returns only by in effect assuming it away a hit and run technology makes the firm behave as if it is competitive in a market precisely because the convexity preconditions for competition are de facto being met in that market this comment shows that strictly speaking there is no such thing as a pure fixed cost unless there are sunk costs located somewhere in the relevant production technology all costs are variable as a matter of formal theory you cannot have a range of decreasing average cost without sunk costs presumably there is also an approximation theorem which states that when sunk costs are close to being negligible then average production costs are practically nondecreasing perfect contestability holds approximately in a market only to the extent that production costs for the market are approximately nondecreasing my discussion will be restricted to the familiar case of a single well defined homogeneous fully divisible commodity while more general approaches are possible for the sake of simplicity the following definition is used the average cost function a c y t describes say the minimum cost per unit of output produced at a uniform flow rate y throughout the time interval 0 t especially in applications to industrial organization theory it is essential to remember that cost functions are not generally timeless and that writing ac as a function of y alone can be dangerously vague behind the free entry and exit of a hitand run technology in a perfectly contestable market is the abstraction of no sunk costs investments are fully reversible because nothing is lost in setting up or shutting down production

preemption and rent equalization in the adoption of new technology we study the adoption of a new technology to illustrate the effects of preemption in games of timing we show that the threat of preemption equalizes rents in a duopoly but that this result does not extend to the general oligopoly game if the gain to preemption is sufficiently small then the optimal symmetric outcome which involves late adoption is an equilibrium this contrasts with reinganum s result that in precommitment equilibria there must be diffusion we develop a new and richer formalism for modeling games of timing which permits a continuoustime representation of the limit of discrete time mixed strategy equilibria

on the effects of entry in cournot markets in the framework of symmetric cournot oligopoly this paper provides two minimal sets of assumptions on the demand and cost functions that imply respectively that as the number of firms increases the minimal and maximal equilibria lead to i decreasing industry price and increasing or decreasing per firm output and ii increasing industry price and decreasing per firm output in both cases per firm profits are decreasing the analysis relies crucially on lattice theoretic methods and yields general unambiguous and easily interpretable conclusions of a global nature as a byproduct of independent interest new insight into existence of cournot equilibrium is developed

stackelberg competition with endogenous entry i characterise endogenous market structures where leaders have a first mover advantage and entry is endogenous leaders are always more aggressive than the followers independently from strategic substitutability or complementarity under quantity competition leaders produce more than any follower and i determine the conditions for entry deterrence high substitutability and non increasing marginal costs under price competition leaders set lower prices than the followers the opposite than with an exogenous number of firms in contests leaders invest more than each follower in all these cases a leadership improves the allocation of resources compared to the nash equilibrium with endogenous entry this article studies endogenous market structures where a firm has a first mover advantage in the sense of stackelberg 1934 on the other firms and entry in the market is endogenous the article characterises the equilibrium of these endo genous market structures and provides welfare analysis for some of the applications these market structures emerge in many sectors which are substantially competitive a fringe of firms is ready to enter whenever there is a profitable opportunity but where some incumbent firms have a competitive advantage over the followers because of technological historical or legal reasons or just because entry was not possible at an earlier stage and choose their strategies before them 1 while symmetric models of strategic interactions have been widely studied in the presence of endogenous entry in a marshallian tradition 2 traditional models with incumbent firms facing a competitive fringe of entrants have been mostly limited to the analysis of markets with homogeneous goods and entry deterrence for instance in the theories of limit pricing and of contestable markets baumol et al 1982 more recently vives 1988 has analysed games with sequential entry of multiple firms but without endogenising the entry process see also anderson and engers 1992 1994

endogenous timing in a mixed oligopoly abstract endogenous order of moves is analyzed in a mixed oligopoly where the firms first choose the timing for choosing their quantities the results are strikingly different from those obtained in a corresponding oligopoly with all profit maximizing firms

measuring interconnectedness between financial institutions with bayesian time varying vector autoregressions we propose a market based framework that exploits time varying parameter vector autoregressions to estimate the dynamic network of financial spillover effects we apply it to financials in the standard poor s 500 index and estimate interconnectedness at the sectoral and institutional levels at the sectoral level we uncover two main events in terms of interconnectedness the long term capital management crisis and the 2008 financial crisis after these crisis events we find a gradual decrease in interconnectedness not observable using the classical rolling window approach at the institutional level our framework delivers more stable interconnectedness rankings than other comparable market based measures

on the existence of cournot equilibrium this paper examines the existence of n firm cournot equilibrium in a market for a single homogeneous commodity it proves that if each firm s marginal revenue declines as the aggregate output of other firms increases which is implied by concave inverse demand then a cournot equilibrium exists without assuming that firms have nondecreasing marginal cost or identical technologies also if the marginal revenue condition fails at a potential optimal point there is a set of firms such that no cournot equilibrium exists the paper also contains an example of nonexistence with two nonidentical firms each with constant returns to scale production