banking deregulation and industry structure evidence from the french banking reforms of 1985 we investigate how the deregulation of the french banking industry in the 1980s affected the real behavior of firms and the structure and dynamics of product markets following deregulation banks are less willing to bail out poorly performing firms and firms in the more bank dependent sectors are more likely to undertake restructuring activities at the industry level we observe an increase in asset and job reallocation an improvement in allocative efficiency across firms and a decline in concentration overall these findings support the view that a more efficient banking sector helps foster a schumpeterian process of creative destruction many economies around the world are characterized by heavily regulated bank

biofuels tax policies and oil prices in france insights from a dynamic cge model abstract the 2009 renewable energies directive red has set up ambitious targets concerning biofuel consumption in the european union by 2020 nevertheless budgetary constraints and growing concerns about the environmental integrity of first generation biofuels have imposed a phasing out of the fiscal instruments to promote them focusing on france this paper combines an exogenous increase in oil prices and tax policies on fossil fuels the objective is to determine the efficiency of an alternative incentive scheme for biodiesel consumption based on a higher price of the fossil fuel substitute policy simulations are implemented through a dynamic computable general equilibrium cge model calibrated on 2009 french data the results show that the 10 biodiesel mandate set by the red would not be achieved even if the fixed taxes on diesel reach the same level as those on gasoline although integrating the rise in oil prices into the fiscal framework improves the biodiesel penetration rate it remains below the target moreover we find that the effects of biofuel consumption are limited to the biofuel chain sectors in other agricultural sectors the substitution effect of biodiesel with diesel is partially offset by the pricing effect induced by higher energy production costs

information use and acquisition in price setting oligopolies asymmetric price setting multi product suppliers have access to multiple sources of information about demand conditions where the publicity of each source corresponds to the cross industry correlation of signals received from it a signal s influence on suppliers prices is increasing in its publicity as well as in its precision the emphasis on relatively public information is stronger for smaller suppliers who control narrower product portfolios when information is endogenously acquired suppliers listen to only a subset of information sources this subset is smaller when products are less differentiated and when the industry is less concentrated smaller suppliers focus attention on fewer information sources the inefficiencies arising from information acquisition and use are identified the associated externalities depend upon the extent of product differentiation the concentration of the industry and the degree of decreasing returns to scale

infrastructure and public utilities privatization in developing countries should governments in developing countries promote private ownership and deregulated prices in noncompetitive sectors or should they run publicly owned firms and regulate prices at the expense of rents to insiders a theoretical model is used to answer these normative questions the analysis focuses on the tradeoff between fiscal benefits and consumer surplus during privatization of noncompetitive sectors privatization transfers control rights to private interests and eliminates public subsidies yielding benefits to taxpayers at the cost of increased prices for consumers in developing countries where budget constraints are tight privatization and price liberalization may be optimal for low profitability industries but suboptimal for more profitable industries and once a market has room for more than one firm governments may prefer to regulate the industry without a credible regulatory agency regulation is achieved through public ownership

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

optimal disclosure policy in oligopoly markets this paper examines the private and social optimality of full disclosure of private information in a two period oligopoly model an incumbent firm is privately informed about the market demand and its production cost after operating as a monopolist in the first period and then competes against an entrant in the second period two main results are derived first it is shown that the incumbent is best off by pre committing to disclose both the demand and cost information by disclosing full information the incumbent nullifies its self defeating intertemporal incentives which arise whenever it has private information about the market demand its cost efficiency or both in addition the equilibrium output variance is the largest under full disclosure which benefits the incumbent ex ante second the paper shows that the incumbent s full disclosure of the demand and cost information may or may not be desirable from a social efficiency standpoint in particular the correlation between the firms production costs is crucial to the rank of disclosure policies in terms of their impact on social efficiency

information concealment in the theory of vertical integration abstract a model of vertical integration is proposed in which the motive for vertical integration lies in the concealment of information to other firms rather than uncovering of a new information since a vertically integrated firm trades internally rather than making publicly observable market transactions vertical integration offers an opportunity for the integrated firm to turn previously observable market data into private information it will be shown that when the acquisition cost of input is uncertain the ex ante profit of a downstream firm will increase if the ex post realized value is private information thereby providing a theory of vertical integration based on strategic information concealment welfare implications of vertical integration are also considered finally we demonstrate that the vertically integrated firm will adopt an inefficient sourcing rule when there are alternative but inferior input suppliers

job tenure in britain 1975 1992 the authors examine eighteen years of a large cross section to build up a picture of job tenure in britain they look for changes in the distribution of job tenure over a turbulent period for the u k labor market the authors find some change in the mean job tenure a decrease in elapsed tenure of about 10 percent between 1975 and 1992 these are important changes but they do not support the view that the dramatic changes in the labor market technology and competition have spelled the end of jobs for life copyright 1996 by royal economic society

declining job security this article defines and analyzes job security in the context of implicit contracts designed to overcome incentive problems in the employment relationship contracts of this nature generate predictions concerning the relationship between job security parameters such as worker seniority and sectoral economic conditions and the probability of separations to test these predictions i estimate binomial and multinomial models of job separations using panel study of income dynamics psid data for the years 1976 93 the results are consistent with a decline over time in the incentives to maintain existing employment relationships for male workers and for skilled white collar women

peddling influence through intermediaries a sender may communicate with a decision maker through intermediaries in this model an objective sender and intermediary pass on information truthfully while biased ones favor a particular agenda but also have reputational concerns i show that the biased sender and the biased intermediary s reporting truthfulness are strategic complements the biased sender is less likely to use an intermediary than an objective sender if his reputational concerns are low but more likely to do so if his reputational concerns are moderate moreover the biased sender may be more likely to use an intermediary perceived to be more biased

export subsidies as signals of competitiveness in a cournot duopoly model of international competition between a domestic and foreign firm it is shown that when the foreign firm has incomplete information about the marginal cost of the domestic firm then the domestic government can use an export subsidy to signal the competitiveness of its firm this signalling effect strengthens the usual profit shifting argument for an export subsidy the optimal export subsidy in the signalling equilibrium may be twice as large as the optimal profit shifting export subsidy under complete information

distributional assumptions in the theory of oligopoly information exchange abstract we analyze the profitability of information sharing among cournot oligopolists receiving private information about random demand in this setting previous authors showed information exchange to be unprofitable when firms marginal costs are constant and outputs are perfect substitutes we introduce a measure of the increase in the accuracy of firms demand forecasts when information is shared we provide two examples showing when this measure is large information exchange is profitable even though firms marginal costs are constant and outputs are perfect substitutes moreover we show that in the linear conditional expectations framework which has been standard in the literature this measure reveals these accuracy gains to be severely limited

information sharing with capacity uncertainty the case of coffee when faced with uncertain capacity constraints coumot oligopolists face two problems should they share information once it becomes known to them and can quantity collusion be sustained this paper shows that agreeing to reveal information does not always increase expected profits as it does in previous models in which the uncertainty is a constant marginal cost parameter this paper also demonstrates that when collusion is not enforceable and information cannot be reliably shared trigger strategies can support equilibrium profits greater than cournot profits when demand is known and supply is uncertain a situation found in agricultural markets such as coffee partage de l information quand la capacite de production est incertaine le cas du cafe quand ils sont en face de contraintes incertaines sur la capacite de production les oligopoleurs a la coumot font face a deux problemes devraient ils partager l information quand elle devient connue et est ce que la collusion via les quantites est viable ce memoire montre que se mettre d accord pour partager l information n augmente pas toujours les profits anticipes comme c est le cas dans des modeles anterieurs oiu l incertitude est un parametre constant du couft marginal on montre aussi que quand la collusion n est pas vigoureusement policee et que l information ne peut pas etre fiablement partagee des strategies gachettes peuvent enclencher des profits plus grands que ceux que produisent la strategie cournot quand la demande est connue et que l offre est incertaine une situation que l on retrouve justement dans des marches de produits agricoles comme le cafe

cost uncertainty and trade liberalization in international oligopoly abstract trade liberalization has been shown to be unfavourable for firms of at least one country for the homogeneous goods case in an environment of certainty we show that in the presence of private cost information and for ex ante identical firms oligopolistic firms will prefer to operate under free trade rather than under autarky in homogeneous goods industries provided there exists a certain degree of firms heterogeneity and a sufficiently large amount of uncertainty for the particular case of symmetry both in demand and industry sizes the firms of at least one country prefer to operate under autarky rather than under free trade

has job stability declined yet new evidence for the 1990 s we update the evidence on changes in job stability through the mid 1990s using recently released current population survey data for 1995 that parallel earlier job tenure supplements in the aggregate job stability declined modestly in the first half of the 1990s moreover the relatively small aggregate changes mask rather sharp declines in stability for workers with more than a few years of tenure nonetheless the data available to this point do not support the conclusion that the downward shift in job stability for more tenured workers and the more modest decline in aggregate job stability reflect long term trends

cartel enforcement with uncertainty about costs what cartel agreements are possible when firms have private information about production costs in order for a cartel agreement to work it must take into account the incentives for firms to misrepresent their cost information and it must provide sufficient reward so that no firm wishes to defect for private cost uncertainty we characterize the set of cartel agreements with side payments that can be supported as bayesian nash equilibria we show that if defection results in either cournot or bertrand competition the incentive problems in large cartels are severe enough to prevent the cartel from achieving the monopoly outcome in contrast with common cost uncertainty the incentive problems become less severe in large cartels allowing perfect collusion

cournot competition and the social value of information in a differentiated product cournot model each supplier receives informative signals about demand the cross industry correlations of the signals differ more public signals have higher correlation coefficients in equilibrium information is used inefficiently from the industry s perspective information is over used and too much emphasis is placed on relatively public signals from the consumer s perspective information is under used and too much emphasis is placed on relatively private signals welfare is enhanced by increasing the use of information as desired by consumers but re balancing that use away from public signals as desired by the industry if information is costly and endogenously acquired then suppliers acquire too much new information but they use it too little

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

information sharing and tax competition among governments abstract the residence based principle has been proposed as a second best measure to the full international coordination of capital tax policies this system requires that tax authorities have full information about the foreign investments of their residents however the degree of information transmission among governments can be considered as a strategic variable we show that under some features of the tax system there will not be any information sharing while there are institutional arrangements under which governments may transmit partial information for strategic purposes we also show that full information sharing is not necessarily a pareto optimum

bertrand competition when rivals costs are unknown the conclusions of the bertrand model of competition are substantially altered by the presence of asymmetric information about rivals costs asymmetric information eliminates the discontinuity in the bertrand model and significantly alters the properties of the market equilibrium in the bertrand nash equilibrium when rivals costs are unknown firms price above marginal cost and have positive expected profit the analysis is extended to franchise competition the market equilibrium is sensitive to market structure and yields incentives for entry copyright 1995 by blackwell publishing ltd

stock price response to accounting information in oligopoly in this article the authors explore the linkages between the ball brown effect and the information transfer effect in oligopoly using the data from the wall street journal s digest of earnings report column they analyze how the stock market reacts to the subearnings information the authors show that an unexpected increase in sales is good news to the disclosing firm as well as to its competitors however an unexpected increase in costs is bad news to the disclosing firm but good news to its competitors the ball brown effect can be viewed as a consequence of stock market reactions to subearnings disclosure copyright 1992 by university of chicago press

information advantage in cournot oligopoly abstract consider an oligopolistic industry where firms have access to the same technology but are asymmetrically informed about the environment even though it is commonplace to think that in this context superior information leads to higher profits we find that under cournot competition this is not generally the case it holds when firms technology exhibits constant returns to scale but it does not necessarily hold otherwise journal of economic literature classification numbers c72 d43 l13

information acquisition as business strategy information acquisition activities such as accounting disclosure financial analysis and marketing research are major concerns in moder business administration business enterprises often invest enormous amounts of time and money in obtaining information for the various tasks of decision making a growing literature is devoted to addressing the role of information in the production decision and the market structure however little effort has been devoted to understanding information acquisition as an essential part of business strategy the purpose of this paper is to analyze information gathering as a competition strategy of manufacturing firms and to examine its implications for the welfare of society li mckelvey and page 13 and vives 20 use a two stage game model to study the information acquisition of oligopolistic firms however these authors ignore the strategic aspect of information acquisition in both 13 and 20 firms are symmetric and produce a homogenous good therefore the equilibrium is also symmetric all firms gather the same amount of industrywide information we generalize 13 in several ways we allow firms to produce differentiated products and to use the information they acquire to contest the product market moreover the information in our model can be partly firm specific and partly industry wide we adopt a convex information cost function more general than that of 13 therefore 13 can be interpreted as a special case of the model presented here novshek and sonnenschein 14 gal or 6 vives 19 and li 12 study the possibility of trading or sharing the exogenous industry wide information about demand okada 15 fried 4 li 12 shapiro 18 and seidmann 17 examine the incentive for disclosing exogenous firm specific information about costs in an oligopoly 2 we extend the analysis in this literature

information revelation in auctions with common and private values we explore the incentives to reveal verifiable private information when there are both common and private components to agents valuations and when private information is held in both dimensions when agents observe only one signal they have no incentive to reveal the signal because such a revelation would negate their information advantage however when agents observe multiple signals they may be incentivized to reveal certain signals that could lower their opponents bids and thereby result in a higher profit from other signals this paper shows that there exists an equilibrium with revelation of common value signals in standard auctions which is an efficient equilibrium that maximizes the social welfare and could provide the seller with a higher profit than a situation with no information revelation

it based technical change and job instability we investigate the impact of it diffusion on the stability of employment we document the evolution of different components of job instability over a panel of 348 cities in france from the mid 1970s to the early 2000s the evidence goes against the view that the diffusion of it has spurred job instability yet analysing long term differences in the occupational structure we find that it diffusion has increased the share of high skill occupations at the expense of low skill occupations this is consistent with french firms reliance on their internal labour market to meet the new skill requirements associated with it diffusion

information sharing information free riding and capital structure in oligopolies we study the effect of capital structure decisions on the incentives for firms in a duopoly to share information through a trade association focusing on the case of cournot competition with demand uncertainty we find that the standard result for all equity firms that information will not be shared may be reversed when one firm has better access to information than the other leverage may be a way for the latter firm to free ride on the former firm s information with ex ante symmetric firms a trade association will be formed even if information sharing does not occur

insisting on a non negative price oligopoly uncertainty welfare and multiple equilibria i study cournot competition under incomplete but symmetric information about the intercept of the linear demand function while assuming that market price must be non negative for all demand realizations although the non negativity assumption is very natural it has only rarely been made in the earlier literature yet it has important economic consequences 1 expected demand effectively becomes convex which means that multiple symmetric pure strategy equilibria can exist and 2 expected total surplus can be larger when the firms do not know demand than when they do the arguments of the paper are relevant also for price competition and for uncertainty about e g cost or the number of firms and these issues are discussed

trade association disclosure rules incentives to share information and welfare in this article i propose a monopolistic competition framework to analyze the effects of different disclosure rules used by trade associations on the incentives to share information and on the welfare of consumers firms and society this framework is appropriate whenever a single firm cannot influence aggregate market magnitudes and serves as a benchmark for the analysis of information pooling agreements abstracting from strategic considerations i report two main results first a policy of nonexclusionary disclosure destroys the incentives to share information while exclusionary disclosure preserves them second information sharing increases expected total surplus with cournot competition but decreases it with bertrand competition in the context of a quadratic normal model with demand uncertainty

note on risk aversion and sharing of firm specific information in duopolies this note extends earlier work on the effects of risk aversion on the preferences of duopolists to share information it is shown that the common finding that cournot duopolists prefer to share firm specific information no longer obtains for some parameterizations in particular the greater the aversion to risk the larger the parameter regions in which not sharing information is preferred copyright 1993 by blackwell publishing ltd

strategic information revelation we analyze the problem in which agents have non public information and are to play an asymmetric information game the agents may reveal some or all of their information to other agents prior to playing this game revelation is via exogenously specified certifiable statements the equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information sufficient conditions are provided for complete revelation of all private information a number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information models encompassing both of these characteristics have been used successfully to examine questions in many fields usually using the concept of bayesian nash equilibrium as the solution concept typically the agents information is given exogenously and is fixed throughout the analysis modelling the information structure as static is appropriate for some problems but not for all in particular situations that are inherently dynamic most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably in such circumstances it is possible that at least one or more of the agents possessing non public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact to the extent that such a communication is believed by the other agents the priors of the other agents will change and we will have what is in essence a new asymmetric information game new in

productivity information in vertical sharing agreements abstract that firms share information with their rivals is both well known and studied however firms also often share information with their suppliers the firm s incentive to share productivity information with both its supplier and its rival is examined it is found that by sharing productivity information a firm raises its own expected input price which raises the rival s expected input price in contrast sharing cost or demand information does not have this effect through this price effect information sharing can increase expected producer surplus in price competition while in previous work the sharing of cost information always reduced producer surplus

recent advances in oligopoly theory from a game theory perspective abstract this paper surveys the contribution that recent developments in game theory have made to the understanding of oligopoly theory it is argued that conventional models suffer from the problem that there are a number of solution concepts offered with little guidance as to which should be selected and this is related to the static nature of the models employed one important development in game theory has been the analysis of repeated games and when applied to oligopoly theory this suggests that outcomes may be more cooperative than conventional theory suggests related to this is the requirement that firms employ credible threats to punish cheating from cooperative outcomes and the paper examines the extent to which imperfect information may restrict the scope of firms to employ such punishments one way in which firms may seek to make threats credible is through strategic investments for example in production capacity and the paper explores how competition over price or output is integrated with competition over instruments for strategic investment

voluntary quality disclosure and market interaction marketers disclose quality information directly to potential consumers using a variety of communication channels this study investigates how competition may influence duopoly firms incentive to voluntarily reveal quality information we show that firms in competitive markets reveal less information than a monopoly firm in addition sequential disclosure leads to asymmetric equilibrium disclosure behavior the disclosure leader reveals unambiguously less information than in the simultaneous disclosure case whereas the follower ex ante reveals less more private information than that released by the leader or by the firms in the simultaneous case when the disclosure cost is sufficiently low high we also examine the equilibrium firm profits and social welfare we demonstrate that there may be a u shaped relationship between equilibrium monopoly profits or social welfare under both monopoly and duopoly and the disclosure cost moreover in comparison to the simultaneous disclosure case sequential disclosure can lead to increasingly softened competition improving both firm profitability and social welfare

information sharing between vertical hierarchies abstract when do principals independently choose to share the information obtained from their privately informed agents information sharing affects contracting within competing organizations and induces agents strategies to be correlated through the distortions imposed by principals to obtain information we show that the incentives to share information depend on the nature of upstream externalities between principals and the correlation of agents information with small externalities principals share information when externalities and correlation have opposite signs and do not share information when externalities and correlation have the same sign in this second case principals face a prisoners dilemma since they obtain higher profits by sharing information

labor market reforms job instability and the flexibility of the employment relationship we endogenize separation in a search model of the labor market and allow for bargaining over the continuation of employment relationships following productivity shocks to take place under asymmetric information in such a setting separation may occur even if continuation of the employment relationship is privately efficient for workers and firms we show that reductions in the cost of separation owing for example to a reduction in firing taxes lead to an increase in job instability and when separation costs are initially high may be welfare decreasing for workers and firms we furthermore show that in response to an exogenous reduction in firing taxes workers and firms may switch from rigid to flexible employment contracts which further amplifies the increase in job instability caused by policy reform

incentives for information production and disclosure in a duopolistic environment this paper examines the nature of the equilibrium solution to the duopoly problem under various incomplete information structures and the incentives to produce and disclose information attention is focused on the duopolists cost functions the results indicate that disclosure of such information is generally beneficial to the duopolists

uncertainty resolution private information aggregation and the cournot competitive limit a cournot model of oligopoly in which otherwise identical firms have private differential information about the common cost of production and a shared but unknown demand curve is examined a bayesian equilibrium of the corresponding game of incomplete information is solved for explicitly and analysed in the symmetric equilibrium different firms produce at different output levels because they have different information because the information individual firms have is random total output and hence market price is also random for any finite number of firms the main result of the paper relates to the asymptotic properties of the equilibrium when the number of firms becomes large under fairly general conditions on the joint distribution of demand and individual firms information about demand the random equilibrium price converges almost surely to a constant in the limit more importantly this price equals the perfectly competitive price in other words in large markets even if no firm knows the true market demand curve and firms are not price takers and do not use price as a signal to improve their information the competitive price will prevail with certainty in the limit aggregate outcomes are as if all firms shared their private information with each other

mergers and investments in cost reduction with private information revisited abstract this paper re examines the model developed by stenbacka 1991 which addresses the investment incentives of an innovating firm operating in anticipation of a merger with its rival in a cournot duopoly setting in contrast to stenbacka we find that the innovating firm need not always invest more should it conceal rather than reveal its r d outcome prior to the takeover furthermore we show that the ex ante incentive for the innovating firm to conceal its private information is perfectly consistent with earlier findings in the information sharing literature

dynamic patent licensing abstract this paper shows one way a fixed fee can dominate an auction if no one knows whether the innovation will succeed or not when it appears and if its life exceeds the life of the patent then selling one licence by fixed fee maximizes inventor profit for some probabilities of success the reason is a nonlicensee is better off when a rival buys a license because this reveals the nature of the innovation if it succeeds the nonlicensee can adopt in the future after the patent has expired this expected future gain can outweigh the expected loss during the life of the patent

changes in job security and their causes an empirical analysis for france 1982 2002 abstract in this paper we analyze the changes in the risks of involuntary job loss in france between 1982 and 2002 we find that these risks are higher in the 1990s than they were in the 1980s we develop an econometric analysis to separate the effects of institutional changes from the effects of new technologies our estimates show that the rise in job loss rates is significantly more pronounced in industries that have the largest share of r d workers and the largest rate of new technologies users these findings suggest that technological changes contribute to decreasing the incentive to keep workers for long period of time and to increasing job insecurity

job stability in the united states two key attributes of a job are its wage and its duration much has been made of changes in the wage distribution in the 1980s but little attention has been given to job durations since hall we fill this void by examining the temporal evolution of job retention rates in u s labor markets using data assembled from the sequence of current population survey job tenure supplements there have been relative declines in job stability for some of the groups that experienced the sharpest declines in relative wages however we find that aggregate job retention rates have remained stable

coordination in oligopoly the private and social efficiency of two behavioral coordination mechanisms is examined in this paper in cournot oligopoly firms prefer immediate coordination on the nash equilibrium interpreted as a preplay communication over the best reply dynamics and fictitous play which converge to the equilibrium but with delay interpreted as a decentralized learning process in bertrand oligopoly firms prefer the learning process these results indicate that firms have incentives to create institutions such as trade associations or informal meetings to facilitate coordination of production capacities but not prices moreover quantity agreements may even increase social welfare

from flexibility to insecurity how vertical separation amplifies firm level uncertainty this article presents a model where firms may endogenously externalize part of their production process we start from the premise that adaptation to uncertainty cannot be contracted upon in the worker employer relationship vertical separation then balances flexibility gains against hold up costs of opportunistic behavior by outside contractors in equilibrium the degree of separation is shown to depend on the degree of product market competition contractor s bargaining power and the volatility of demand shocks our main result is that an increase in the degree of vertical separation amplifies the elasticity to demand shocks of firms sales and employment it does not however amplify aggregate uncertainty evidence from firm level data is shown to be largely consistent with the main implications of our theory jel l16 l23 l24

information sharing in oligopoly the truth telling problem while under some circumstances information sharing in oligopoly may be beneficial the literature ignores the possibility of strategic information sharing by assuming verifiability of data i endogenize the incentives for truthful information sharing and prove that if firms have the ability to send misleading information they will always do to overcome this problem i introduce a costly mechanism through which the firm will in its own best interest reveal the true value of its private information even though outside verification is impossible i show that in some cases benefits from information sharing exceed the signalling costs while in other cases the reverse is true the fact that i model a two sided signalling enables me to mitigate the signalling cost problem rather than burning money oligopolistic rivals may exchange transfer payments thereby significantly reducing signalling costs

the effects of information transparency on suppliers manufacturers and consumers in online markets this paper looks into the effects of information transparency on market participants in an online trading environment we study these effects in business to business electronic markets with firms competing in both upstream and downstream industries the prior literature generally assumes that either the downstream firm buyer or the upstream firm seller is a monopoly it is not clear whether information transparency would still create value if both buyers and sellers face oligopolistic competition where the benefits of information transparency could be competed away to answer this question we first develop a simple two echelon e market model and then extend the model to more general settings we find that information transparency can create value for the overall e market yet it affects buyers and sellers very differently one side will be hurt depending on the competition mode cournot or bertrand in the downstream this suggests that a manufacturer owned a supplier owned and a neutral e market will have different preferences for information transparency finally we find that information transparency can hurt consumers when the downstream industry engages in bertrand competition this is a surprising result given the expectation that online markets create substantial value for consumers

on communication and collusion we study the role of communication within a cartel our analysis is carried out in stigler s 1964 model of repeated oligopoly with secret price cuts firms observe neither the prices nor the sales of their rivals for a xed discount factor we identify conditions under which there are equilibria with cheap talk that result in near perfect collusion whereas all equilibria without such communication are bounded away from this outcome in our model communication improves monitoring and leads to higher prices and pro ts jel classi cation c73 d43

computerisation and wage dispersion an analytical reinterpretation the rich countries have recently seen a dramatic rise in income inequality all the more surprising because the long term trend had been toward equality this paper examines one of the leading explanations computerisation in the workplace i offer a theory of computers impact on white collar work which goes far toward explaining the timing form and locus of recent labour market changes the theory looks at the bureaucratic and organisational applications of computers that have been first largest and most influential they have two effects on firms demand for labour at different skill levels

customer information sharing among rival firms abstract the recent rapid growth of the internet as a medium of communication and commerce combined with the development of sophisticated software tools are to a large extent responsible for producing a new kind of information databases with detailed records about consumers preferences these databases have become part of a firm s assets and as such they can be sold to third parties this possibility has raised numerous concerns from consumer privacy advocates and regulators who have entered into a heated debate with business groups and industry associations about whether the practice of customer information sharing should be banned regulated or left unchecked this paper investigates the incentives of rival firms to share their customer specific information and evaluates the welfare implications if such exchanges are banned in the context of a perfect price discrimination model

information sharing and lending market competition with switching costs and poaching abstract we analyze information sharing with repeated banking competition in the presence of switching costs we find that information sharing renders poaching more profitable in future rounds of competition since the poaching activities can be targeted towards more creditworthy borrowers we find that information sharing reduces relationship benefits and therefore relaxes competition for initial market shares information sharing introduces a welfare tradeoff by promoting equilibrium profits at the expense of talented entrepreneurs whenever market power persists in credit market whereas it is a matter of indifference without market power thus information sharing may induce exclusion of creditworthy borrowers from credit markets

long run trends in workers beliefs about their own job security evidence from the general social survey in recent years federal reserve chairman alan greenspan former u s secretary of labor robert reich and many journalists have argued that workers are more anxious about losing their jobs than they were in the past i use the 1977 96 general social survey to document trends in workers beliefs about their own job security during the 1990s workers have been more pessimistic about losing their jobs in the next 12 months than workers were during the 1980s workers have also been more concerned about suffering future job loss that would have resulted in a decline in earnings or a spell of unemployment

information transparency of business to business electronic markets a game theoretic analysis the abundance of transaction data available on the internet tends to make information more transparent in electronic marketplaces in such a transparent environment it becomes easier for suppliers to obtain information that may allow them to infer their rivals costs is this good news or bad news in this study we focus on theinformational effects of business to business b2b exchanges and explore firms incentives to join a b2b exchange that provides an online platform for information transmission we then study the equilibria by developing a game theoretic model under asymmetric information we examine whether the incentives to join a b2b exchange would be different under different competition modes quantity and price different information structures and by varying the nature of the products substitutes and complements our results challenge the information transparency hypothesis i e open sharing of information in electronic markets is beneficial to all participating firms in contrast to the popular belief we show that information transparency could be a double edged sword the individual rationality of participation in the online exchange reflects the tradeoff between information transparency and data confidentiality this may have important implications for the microstructure design e g data access rules of b2b electronic marketplaces

an empirical test of monopoly behaviour an application to the hardwood case 1988 an empirical test of monopoly behaviour an application to the hardwood case applied economics vol 20 no 8 pp 1115 1127

fixed term contracts and the dynamics of labour demand abstract we estimate a model of labour demand that accounts for dynamics arising from the relative costs of hiring and firing workers on either indefinite term contract itc or fixed term contract ftc we use a panel of 1000 french firms for which we can measure the number of entries and exits for each type of contract between 1988 and 1992 our estimates suggest that 1 it is much more costly to lay off workers under itc than to hire them 2 it is much less costly to adjust the number of ftc than to adjust the number of itc 3 the asymmetry between hiring and layoff costs is more important for non production than for production workers

learning from foreign investment by rival firms theory and evidence we offer an alternative explanation for follow the leader behavior in foreign investment decisions based on bayesian learning by rival firms we test the implications of the model through a panel count data sample of mnes that have invested in central and eastern europe over the period 1990 1997 interacting the measure of rivals investment in country industry pairs with uncertainty we are able to identify the channel of bayesian learning about revenue postulated by the model as the only one consistently generating the detected follow the leader behavior of foreign investments the empirical findings are robust with respect to different model specifications

heterogeneity and the incentive to share information in cournot oligopology market this paper addresses the robustness of information sharing incentives of the cournot oligopoly firms to differences in the cost functions and the quality of information specifically the author investigates which firm has more incentive to share information the conditions under which information sharing is mutually beneficial and when it is not mutually beneficial the conditions under which a firm gains enough to entice the unwilling firm into sharing information by compensation he shows that the firm with a less convex cost function has more incentives to share information and presents conditions for the latter two issues copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

exploration and extraction in a duopoly exhaustible resource market exploration for an exhaustible natural resource is valuable because it produces information about the resource stock i model a duopoly exhaustible resource industry with imperfect information about stock size as a two period game where each period is made up of an exploration stage and an extraction stage i derive the value of gaining information about stock size prior to committing to an extraction plan both for the exploring firm and for the rival i show that an exploring firm would prefer on average to keep exploration information private but that industry profit is higher when information is made public le processus d e xploration et d extraction dans un marche de ressource naturelle non renouvelable oui il y a un duopole le processus d exploration est utile parce qu il permet de produire des renseignements quant a la taille du stock d une ressource naturelle non renouvelable l auteur examine un modele de duopole dans un jeu a deux p6riodes pour une industrie de ressource naturelle non renouvelable l information est imparfaite quant a la taille du stock de resource et chacune des deux p6riodes a un stage d exploration et un stage d extraction l auteur d6rive la valeur de l information additionnelle qujant a la taille du stock de ressource avant de s etngager dans un plan d extraction a la fois pour l entreprise exploratrice et pour l entreprise rivale on montre que l enterprise exploratrice va pr6f6rer en moyenne garder l information priv6e mais que les profits dans l industrie sont plus 6lev6s quand l information est rendue publique

information transmission cournot and bertrand equilibria we examine how incentives for two duopolists to honestly share information change depending upon the nature of competition cournot or bertrand and the nature of the information structure while in earlier papers uncertainty is about an unknown common demand intercept in the present paper uncertainty is about unknown private costs the different information structure reverses the incentives to share information while with unknown common demand sharing is a dominant strategy with bertrand competition and concealing is a dominant strategy with cournot competition with unknown private costs sharing is a dominant strategy with cournot competition and concealing is a dominant strategy with bertrand competition

cournot oligopoly with information sharing this paper studies the incentives for information sharing among firms in a cournot oligopoly facing a linear uncertain demand and an affine conditional expectation information structure no information sharing is found to be the unique equilibrium in two cases in which the signals with equal precision are assumed indivisible and infinitely divisible however the nonpooling equilibrium converges to the situation where the pooling strategies are adopted as the amount of information increases hence the efficiency is achieved in the competitive equilibrium as the number of the firm become large

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

the value of information in explicit cross border capacity auction regimes in electricity markets abstract we study two electricity markets connected by a fixed amount of cross border capacity the total amount of capacity is known to all electricity traders and allocated via an auction the capacity allocated to each bidder in the auction remains private information we assume that traders are faced with a demand function reflecting the relationship between electricity transmitted between the markets and the spot price difference therefore traders act like bayesian cournot oligopolists in exercising their transmission rights when presented with incomplete information about the competitors capacities our analysis breaks down the welfare effect into three different components cournot behavior capacity constraints and incomplete information we find that social welfare increases with the level of information with which traders are endowed

strategic information management under leakage in a supply chain the importance of material flow management for a profit maximizing firm has been well articulated in the supply chain literature we demonstrate in our analytical model that a firm must also actively manage information flows within the supply chain which translates to controlling what it knows as well as what its competitors and suppliers know in our model of horizontal competition between an informed and an uninformed firm with a common upstream supplier material and information flows intersect through leakage of demand order information to unintended recipients as a result the informed firm s drive to control information flows within the supply chain can trigger operational losses through material flow distortion these losses can be so severe that the firm may prefer not to acquire information even when it is costless to do so our results underscore the importance of strategic information management actively managing the supply chain s information flows and making trade offs with material flows where appropriate to maximize profits

communication in cournot oligopoly abstract this paper studies communication in a static cournot duopoly model under the assumption that the firms have unverifiable private information about their costs we investigate the conditions under which the firms cannot transmit any information through cheap talk and show that when these conditions are violated it may be possible to construct informative cheap talk equilibria if the firms can communicate through a third party communication can be informative even when informative cheap talk is impossible we exhibit a simple mediated mechanism that ensures informative communication and interim pareto dominates the uninformative equilibrium for the firms

risk and revelation changing the value of information a different approach is introduced to determine the value of an information sharing agreement the measure of risk aversion loving this approach reveals the relationship between information sharing models and the risk literature it also allows uncertainty regarding the slope of a firm s own demand function to be examined which previous work eschews the results suggest that the incentive to reveal information is more prevalent than previously thought firms prefer to commit to reveal private valued information in both quantity and price competition this differs from previous work where the incentive to commit depended on the type of competition

incentives in organizations n 1975 steven kerr published on the folly of rewarding a while hoping for b the argument was simple you get what you pay for kerr distilled this unifying theme from a disparate set of examples involving politicians soldiers doctors orphanage directors professors and students as well as manufacturing and clerical employees and even human resource managers from these examples kerr pp 77980 concluded that two main causes of distorted incentives are fascination with an objective criterion where individuals seek to establish simple quantifiable standards against which to measure and reward performance and overemphasis on highly visible behaviors when some parts of the task are highly visible while others are not it took agency theory 15 years to express kerr s title not to mention to evaluate or extend his conclusions during this period agency theory was obsessed with the tradeoff between incentives and insurance even though clear eyed observations like kerr s about the design and performance of real incentive contracts suggested that several other issues are at least as important fortunately recent work has brought agency theory not only to kerr s position but beyond in this paper i summarize four new strands in agency theory that help me think about incentives in real organizations as a point of departure i begin with a quick sketch of the classic agency model i then discuss static models of objective performance measurement that sharpen kerr s argument repeated game models of subjective performance assessments incentives for skill development rather than simply for effort and incentive contracts between versus within organizations i con

changes in job instability and insecurity using monthly survey data this article provides evidence on changes in short term job instability and insecurity using the survey of income and program participation monthly measures from this data set are contrasted with annual measures from the survey of income and program participation and the panel study of income dynamics neither data set shows an increase in job turnover during the 1980s and 1990s we also examine indicators of increased insecurity these include the probability that a job ends involuntarily is followed by a spell of nonemployment or that the subsequent job has lower wages these indicators of insecurity also show no upward trend

mergers and investments in cost reduction with private information abstract we present a model of cost reducing r d investments where the marginal cost realization is private information of the innovating firm the main contribution is the conclusion according to which with merger anticipations the innovating firm does not have ex ante incentives to reveal its cost realization prior to the takeover interestingly we also find the expected consumer surplus to be higher for the regime characterized by incomplete information as compared to a regime based on information sharing

trends in job instability and wages for young adult men data and measurement problems have complicated the debate over trends in job instability in the united states we compare two cohorts of young white men from the national longitudinal surveys nls construct a rigorous measure of job change and confirm earlier findings of a significant increase in job instability we then benchmark the nls against other main data sets in the field and conduct a thorough attrition analysis extending the analysis to wages we find that the wage returns to job changing have both declined and become more unequal for young adults mirroring trends in their long term wage growth

too much information sharing welfare effects of sharing acquired cost information in oligopoly by using general information structures and precision criteria based on the dispersion of conditional expectations we study how oligopolists information acquisition decisions may change the effects of information sharing on the consumer surplus sharing information about individual cost parameters gives the following trade off in cournot oligopoly on the one hand it decreases the expected consumer surplus for a given information precision as the literature shows on the other hand information sharing increases the firms incentives to acquire information and the consumer surplus increases in the precision of the firms information interestingly the latter effect may dominate the former effect

duopoly information equilibrium cournot and bertrand abstract in a duopoly model where firms have private information about an uncertain linear demand it is shown that if the goods are substitutes not to share information is a dominant strategy for each firm in bertrand cournot competition if the goods are complements the result is reversed furthermore the following welfare results are obtained 1 i with substitutes in cournot competition the market outcome is never optimal with respect to information sharing but it may be optimal in bertrand competition if the products are good substitutes with complements the market outcome is always optimal 2 ii bertrand competition is more efficient than cournot competition 3 iii the private value of information to the firms is always positive but the social value of information is positive in cournot and negative in bertrand competition

duopoly information exchange the case of unknown slope abstract we model information exchange between duopolists facing a common random demand the slope of the common demand curve facing the firms is assumed unknown and firms observe private signals about this slope we show that for sufficiently large variation in the demand slope firms earn strictly higher profit when they share their information rather than keeping it private even with constant marginal costs and homogeneous goods in this case it is a nash equilibrium for the duopolists to share their information in a quid pro quo information exchange consistent with earlier models information exchange raises welfare

is job stability in the us falling reconciling trends in the current population survey and panel study of income dynamics this article considers whether two commonly used sources of information on employer tenure the panel study of income dynamics and the current population survey yield systematically different trends in employer tenure little evidence of a discrepancy between the data sets in the 1980s or 1990s is found when comparable samples variable definitions and time frames are used neither data set shows a significant trend in the share of workers with 1 year or less of tenure while both data sets show an increase in the fraction of men with less than 10 years of tenure starting in the late 1980s

on the use of heuristics to approximate competitors private information abstract firms often lack knowledge of the nature of the uncertainty they or their opponents face and use heuristics or approximations to determine their strategy we define and analyze one type of heuristic strategy in which firms choose strategies based on the expectation of their opponents private information rather than the full information about the distribution of that private information we find that in equilibrium the degree to which the heuristic strategy differs from the bayesian strategy depends on 1 the convexity of a firm s marginal profits with respect to their opponents private information and 2 whether firm strategies are complementary or substitutable under certain conditions firms equilibrium profits are greater when all firms use heuristics than when all firms use the full information our results provide insight into incentives firms may have to either facilitate or impede access to industry information

public firms as regulatory instruments with cost uncertainty we re examine the regulatory role of a public firm in an environment of private but correlated information about irndustry costs we study three regimes of mixed market interaction involving both public and private firms a symmetric bayesian nash equilibrium an asymmetric bayesian equilibrium in which the public firm is able to commit to production before the private firms and a mechanism in which the regulator designs an incentive compatible schedule for the industry we find that a public firm plays an important strategic informational role which strengthens its role as a disciplinary regulatory instrument further

the impact of information sharing opportunities on market outcomes an experimental study information regarding uncertain demand conditions or industry costs as well as the opportunity to share this information can have an important impact on firm behavior a series of recent game theoretic models have characterized the incentives for firms to share information regarding uncertain parameters 3 7 8 13 14 16 22 26 20 21 provide a comprehensive survey most of the models assume that behavior in the output market is noncooperative regardless of the firms information sharing decisions this paper reports a series of 15 laboratory sessions that test the noncooperative backward induction approach of these models the results suggest that pricing behavior may be influenced by the information sharing decision under most conditions the noncooperative nash model accurately describes average behavior although in certain conditions information sharing appears to facilitate tacit collusion the paper also estimates a simple behavioral model of learning that describes how experimental subjects learn the optimal information sharing decision as an alternative to the theories backward induction assumption the information sharing models tested here have been interpreted as identifying the incentives for competitive firms to form a trade association that reduces their uncertainty thousands of trade and professional associations are active worldwide and the majority collect information from their members that is aggregated and distributed through association statistical programs the theoretical models demonstrate how three variables influence the information sharing incentives 1 the type of competition bertrand or cournot 2 the nature of the goods substitutes or complements and 3 the source of uncertainty demand or cost the first two variables determine the slope of the firms reaction functions and the uncertainty source along with the information sharing decision determines the degree of correlation among the firms strategies the incentive for noncooperative firms to share information shifts as these three variables change because reduced correlation has a negative or positive effect on profit depending upon the slope of the reaction functions

voluntary disclosure and investment in environmental technology abstract i examine the role of voluntary disclosure programs in creating market incentives for competing firms to invest in environmentally cleaner technology in an industry subject to environmental regulation such as emission taxes such programs may allow firms to credibly disclose their progress in achieving compliance cost reduction through investments in internal rd the outcome of the investment is private information i show that the ex ante incentive to invest is always higher in the presence of the voluntary disclosure program than without it in particular the opportunity to credibly disclose progress in cost reduction allows a successful firm to convey its true position of competitive advantage to the rival firm and realize higher market share and profit thus voluntary disclosure programs increase the efficacy of traditional forms of environmental regulation in creating incentives for green technological change even when buyers have no preference for greener technology i show that such programs generally increase social welfare

internal conflict market uniformity and transparency in price competition between teams abstract the way profits are divided within successful teams imposes different degrees of internal conflict we experimentally examine how the level of internal conflict and whether such conflict is transparent to other teams affects teams ability to compete vis a vis each other and consequently market outcomes participants took part in a repeated bertrand duopoly game between three player teams which had either the same or different levels of internal conflict uniform vs mixed profit division was either private pay high conflict each member received her own asking price or equal pay low conflict profits were divided equally we find that internal conflict leads to tacit coordination on high prices in uniform private pay duopolies but places private pay teams at a competitive disadvantage in mixed duopolies competition is softened by transparency in uniform markets but intensified in mixed markets we propose an explanation of the results and discuss implications for managers and policy makers d43 l22 c92

majoritarian preference utilitarian welfare and public information in cournot oligopoly abstract can individual preferences for public information among heterogeneous consumers be aggregated into a meaningful social preference that does not suffer from condorcet cycles in a cournot model where homogeneous producers observe a public signal about an uncertain cost of production prior to taking quantity decisions we show that the majoritarian preference of consumers for the precision of public information is fairly well behaved so that a condorcet winner always exists under a monotonicity condition on the demand function we characterize the condorcet winning precision in terms of the demand function and the number of firms under which the condorcet winning precision i hurts consumers surplus and profits or ii remains conflict free these results have interesting implications on collective bayesian persuasion by agencies representing consumers showing that when full transparency maximizes expected consumers surplus collective bayesian persuasion can lead to full opacity and vice versa

information sharing in private value lottery contest we investigate players incentives to disclose information on their private valuations of the prize ahead of a rent seeking contest information sharing arises in equilibrium if types are concentrated enough whereas sharing information is strictly dominated if types are sufficiently dispersed