innovation and regional growth in small high technology firms evidence from britain and the usa oakey r p 1984 innovation and regional growth in small high technology firms evidence from britain and the usa reg studies 18 237 251 this paper examines the varying impact of regional resources on innovation in small high technology firms evidence is drawn from diverse local economies ranging from the development region of scotland through the south east of england to the bay area of california measurement focuses on the key inputs to innovation of research and development and investment capital surprisingly the findings indicate encouraging small firm innovation and growth in scotland an anticipated higher incidence of venture capital funding in the usa is confirmed and quantified with concluding comments on the policy implications resulting from this discrepancy

angel investors around the world we document that the choice between disintermediated individual angel investments and intermediated private equity and venture capital investments depends on legal economic and cultural differences we find evidence of this using pitchbook s comprehensive data on more than 5000 angel and 80 000 private equity and venture capital investments in 96 countries from 1977 to 2012 the data further indicate that investee firms funded by angels are less likely to successfully exit through either an ipo or an acquisition these findings are robust to propensity score matching methods as well as to clustering standard errors and excluding u s observations among other approaches

closing the regional equity capital gap the role of informal venture capital there is evidence from a number of countries that small firms encounter a shortage of long term investment finance particularly at start up and initial growth expansion of the institutional venture capital industry has done little to fill this equity gap on account of its preference for making large investments in established companies and management leveraged buyouts moreover the supply of venture capital exhibits a high level of spatial concentration initiatives by state provincial and local governments most notably in economically lagging regions to increase the supply of risk capital for start ups and early stage businesses have at best provided a very partial and often costly solution a more appropriate approach to increasing the supply of start up and early stage finance is to facilitate the more efficient operation of theinformal venture capital market informal investors or business angels are private investors who provide risk capital directly to new and growing businesses in which they have no family connection most business angels are unable to find sufficient investment opportunities and so have substantial uncommitted funds available there is also considerable scope for expanding the population of business angels the most cost effective means of closing the equity gap is therefore for the public sector to underwrite the operating costs of business introduction services whose objective is to overcome the two main sources of inefficiency in the informal venture capital market namely the invisibility of business angels and the high search costs of angels seeking investment opportunities and entrepreneurs seeking investors by the provision of a channel of communication between informal investors and entrepreneurs seeking finance

developing the informal venture capital market a review of the department of trade and industry s informal investment demonstration projects 1 this paper summarizes the key findings from the final review and evaluation of five informal investment demonstra tion projects department of trade and industry crown copyright is reproduced with the permission of thecontroller of hmso

dynamic processes of social and economic interactions on the persistence of inefficiencies an economy with a finite number of agents and a finite number of states is considered an exogenous institutional rule prescribes which moves from one state to another are feasible to each coalition at each time an agent is called to act with some exogenous probability and he chooses a coalition a feasible new state to move the economy to and side payments between the agents in the coalition the setup can be applied to various dynamic processes of social and economic interactions such as legislative bargaining coalition formation or exchange economies whenever agents are unable to write long term contracts but are otherwise unconstrained both in their ability to write arbitrary spot contracts and in their ability to collude there can be long run inefficiencies with cycles or inefficient steady states however when agents are sufficiently patient the initial state from which the process starts plays no role in the long run moreover when there exists an efficient state that is free of negat

informal risk capital in sweden and some international comparisons abstract in many countries there seems to be a shortage of risk capital i e equity or equity linked capital for entrepreneurial ventures seeking external capital as a consequence many entrepreneurial ventures are undercapitalized with a high loan capital burden there is some evidence from the u sa that informal investors provide an essential source of equity capital to entrepreneurial ventures however our knowledge about the informal risk capital markets is dominated by research from the u s a and there are few studies carried out in other countries this study represents the first description of the informal risk capital market in sweden the aim of the study is also to compare the characteristics of informal investors in sweden with those in the u sa and the u k information from 52 informal investors is used for the description of the informal risk capital market in sweden an international comparison is made by using the results of studies by gaston 1989 on informal investors in the u sa and mason et al 1991 on the informal risk capital market in the u k what about the informal risk capital market in sweden traditionally the tax system in sweden has not stimulated private wealth accumulation and there has been a tradition to seek formal institutional solutions to solve the problems faced by entrepreneurial ventures however in recent years there has been a growing interest in the potential role of informal investors to fill the equity capital gap for entrepreneurial ventures today there seems to be an informal risk capital market in sweden even if it is not very large in terms of investor demographics investment activity portfolio characteristics and the relationship between the informal investor and the portfolio firm the informal investors in sweden can be characterized in the following way they are predominantly male and they are financially well off one main characteristic is that they are very experienced entrepreneurs and it can be assumed that the majority of the informal investors have made their fortunes through a cash in of their businesses the informal investors in sweden seem to be frequent investors and their acceptance rate is rather high furthermore they seem to be rather careful in their evaluation of new investment opportunities and also invest large amounts of money in their informal investments the informal investors seem to make their investments in established firms and in more low tech industry sectors therefore they only partly seem to play a role infilling the equity capital gap for entrepreneurial ventures the informal investors relationship to their portfolio firms can be characterized as active but they are not involved to any large extent in daily operations the most common way of organizing the relationship is by way of active work on the board and by providing consulting help when needed what are the similarities and differences between informal investors in the u k the u s a and sweden this study shows that there are some similarities for example informal investors are predominantly male with an entrepreneurial background financially well off and they identify investment opportunities from friends and business associates on the other hand there seem to be some important differences for example informal investors in the u k and sweden seem to be older than those in the u s a furthermore informal investors in sweden invest a higher proportion of their wealth in informal investments compared to their counterparts in the u s a and the u k in terms of investment activities informal investors in the u k can be characterized as less sophisticated and ad hoc investors and they seldom make investments with other informal investors on the other hand informal investors in the u s a and sweden seem to be more professional in their investment activities i e they make many serious evaluations of new investment opportunities and they put rather large emphasis on the evaluation in terms of portfolio characteristics informal investors in sweden seem to take the lowest risks in their investment portfolios compared to their counterparts in the u s a and the u k finally informal investors in the u k the u s a and sweden work differently in relationship to their portfolio firms in the u k the relationship can be characterized as passive i e their involvement in the portfolio firms daily operations is usually rather low on the contrary the informal investors in the u s a work very actively in their portfolio firms the analysis shows that there seem to be two extreme categories of informal investors one extreme is represented by many of the informal investors in the u k they can be characterized as infrequent and less sophisticated investors who invest small amounts of money and work as rather passive investors the other extreme is represented by informal investors in the u s a they seem to be more professional and active in their informal investments informal investors in sweden show some similarities with their u s counter parts but they work less actively in the portfolio firms than do informal investors in the u s a the differences between the characteristics of informal investors in the u k the u s a and sweden are of course attributable to differences in contextual factors such as investment climate entrepreneurial traditions fiscal regimes regulatory environment and wealth distribution this implies that it may be difficult to copy measures to stimulate the informal risk capital market from one country to another

a theory of endogenous coalition structures consider an environment with widespread externalities and suppose that bind ing agreements can be written we study coalition formation in such a setting our analysis proceeds by defining on a partition function an extensive form bargaining game we establish the existence of a stationary subgame perfect equilibrium for such a game our main results are concerned with the characterization of equilib rium coalition structures we develop an algorithm that generates under certain conditions an equilibrium coalition structure our characterization results are especially sharp for symmetric partition functions in particular we provide a uniqueness theorem and apply our results to a cournot oligopoly journal of economic literature classification numbers c71 c72 c78 d62 q 1999 academic press

marginal contributions and externalities in the value our concern is the extension of the theory of the shapley value to problems involving externalities using the standard axiom systems behind the shapley value for an arbitrary exogenous coalition structure leads to the identification of bounds on players payos around an externality free value in endogenizing the coalition structure we analyze a two stage process of coalition formation in whose second stage our axiomatic results are applied we find reasons to explain inecient coalition structures and provide sucient conditions for eciency

the type agent core for exchange economies with asymmetric information abstract the type agent core is a new solution concept for exchange economies with asymmetric information it coincides with the set of subgame perfect equilibrium outcomes of a simple competitive screening game uninformed intermediaries help the agents to cooperate in an attempt to make some profit the paper extends the work of perez castrillo cooperative outcomes through non cooperative games games econ behav 7 1994 428 440 to exchange economies with non transferable utility and asymmetric information the type agent core is a subset of wilson s coarse core wilson information efficiency and the core of an economy econometrica 46 1978 807 816 it is never empty even though it may be a strict subset of wilson s fine core in addition it converges towards the set of constrained market equilibria as the economy is replicated

a note on the individualistic foundations of the core in economies with asymmetric information abstract two foundations of the core are considered in the context of exchange economies the standard coalition based interpretation and one based on the individual profit seeking behaviour of agents the resulting core notions coincide in symmetric information economies but diverge when generalized to economies with asymmetric information

dynamic coalition formation and the core this paper presents a dynamic model of endogenous coalition formation in cooperative games with transferable utility tu the players are boundedly rational at each time step a player decides which of the existing coalitions to join and demands a payoff these decisions are determined by a best reply rule given the coalition structure and allocation in the previous period further the players experiment with myopically suboptimal strategies whenever there are potential gains from trade we establish an isomorphism between the set of absorbing states of the process and the set of core allocations and show that the process converges to one of these states with probability one whenever the core is non empty these results do not require superadditivity of the characteristic function and they carry over to the case of coalitional values depending on the coalition structure and to non transferable utility ntu games

bargaining and value we present and analyze a model of noncooperative bargaining among n participants applied to situations describable as games in coalitional form this leads to a unified solution theory for such games that has as special cases the shapley value in the transferable utility tu case the nash bargaining solution in the pure bargaining case and the recently introduced maschler owen consistent value in the general nontransferable utility ntu case moreover we show that any variation in a certain class of our bargaining procedure which generates the shapley value in the tu setup must yield the consistent value in the general ntu setup

conflicts between entrepreneurs and investors the impact of perceived unethical behavior this paper examines the impact of perceived unethical behavior by entrepreneurs angel investors and venture capitalists on their conflict process for this purpose we use an embedded case study design to provide a diversity of perspectives on the topic at hand from the eye of the beholder i e investor entrepreneur or both 11 conflict situations were analyzed for any perceived unethical behavior based on findings from within and cross case analysis we propose that perceived unethical behavior among venture partners triggers conflicts between them through increased fault attribution or blaming further we propose that perceived unethical behavior affects venture partners choice of conflict management strategy and increases the likelihood of conflict escalation and of conflict having a negative partnership outcome such as failure or another form of involuntary exit as such this paper contributes to the entrepreneurship literature by addressing calls for more research on the darker sides of investor investee relationships

financing the small firm this study presents a framework to delineate financing the small firm special consideration is given to small firms unique financing sources such as trade and bank credit entrepreneur s own resources informal investment and venture capital the small firm has limited or no access to many traditional debt and equity markets that supply long term financing to the corporate world and therefore operates in segmented and imperfect financial markets the links between small firms financing opportunities and managerial goals are traced from the start up stage through establishing a mature firm as the small firm matures it operates in a broader financial market this study establishes the foundation for future empirical research

assessment of government funding of business angel networks in flanders collewaert v manigart s and aernoudt r assessment of government funding of business angel networks in flanders regional studies the paper evaluates whether government intervention through the subsidization of business angel networks bans enhances regional economic growth in flanders belgium it shows that firstly bans reduce the information and financing problems entrepreneurial companies face secondly that these companies contribute to economic development and growth thirdly that there are positive indicators of future potential such as an upward evolution in value creation and the ability to raise follow on financing finally the programme has many positive indirect effects this leads to a tentative conclusion that public ban support is warranted however to make this conclusion more robust requires a longer term evaluation collewaert v manigart s et aernoudt r une evaluation des finances publiques en faveur des reseaux de bailleurs de fonds en flandres regional studies on cher

mistakes in cooperation the stochastic stability of edgeworth s recontracting in an exchange economywith a finite number of indivisible goods we analyze a dynamic trading process of coalitional recontracting where agents may make mistakes with small probability we show first that the recurrent classes of the unperturbed mistake free process consist of i all core allocations as absorbing states and ii cycles of non core allocations next we introduce a perturbed process where the resistance of each transition is a function of the number of agents that make mistakes do not improve in the transition and of the seriousness of each mistake if preferences are always strict we show that the unique stochasticallystable state of the perturbed process is the walrasian allocation in economies with indifferences non core cycles are sometimes stochastically stable while some core allocations are not

bargaining one dimensional social choices we analyze bargaining over the one dimension characteristic of a public good among n impatient players when decisions require q favorable votes q 2 stationary subgame perfect equilibrium strategies are characterized for all games with deterministic protocol we provide a monotonicity condition satisfied by all single peak strictly quasi concave and concave utilities that assures uniqueness for every q whenever player s utilities are symmetric around the peak without symmetry the monotonicity condition assures uniqueness for qualified majorities q n 2 provided that agents are sufficiently patient and utilities satisfy an additional regularity condition asymptotic uniqueness is assured for qualified majorities by imposing only the monotonicity condition

coalition formation and bargaining protocols a review of the literature this paper offers a review of the vast literature regarding bargaining and coalition formation this topic has been generally described as the attempt to provide strategic foundations to cooperative solution concepts it can therefore be seen as the linking ring between the non cooperative and the cooperative game theoretic approach to coalition formation its central role in economic theory and its relatively long history that goes back to the nash program have fostered a large academic production including surveys nonetheless this paper will focus on an aspect that is often neglected in the dedicated surveys the specificities of the bargaining protocols leading to different outcomes although generally downgraded to the rank of details the differences in bargaining protocols even when minor can cause significant changes in fundamental aspects such as the possibility to reach full cooperation the distribution of final pay offs and the time taken to reach an agreement focused on externalities free games therefore on bargaining protocols sustaining solution concepts for cooperative games in characteristic function form the paper aims at providing a brief but exhaustive review of the topic that could result in a very useful tool for any researcher approaching the subject of coalitional bargaining

non cooperative bargaining and the incomplete informational core abstract in an exchange economy with incomplete information the signaling core is defined by the set of state contingent allocations to which no coalitions object under informational leakage through proposals by informed agents an objection underlying the signaling core is supported by a sequential equilibrium of an ultimatum bargaining game with an informed proposer we prove that a stationary sequential equilibrium allocation in a rubinstein type sequential bargaining game with a restart rule belongs to the signaling core if the belief of players satisfies a self selection property

a one stage model of link formation and payoff division abstract in this paper we introduce a strategic form model in which cooperation structures and divisions of the payoffs are determined simultaneously we analyze the cooperation structures and payoff divisions that result according to nash equilibria strong nash equilibria and coalition proof nash equilibria we find that no cycle will be formed if a player claims a positive amount for the formation of one of its links and that a player does not necessarily profit from a central position in a cooperation structure journal of economic literature classification numbers c71 c72

business performance and angels presence a fresh look from france 2008 2011 business angels enjoy a strong reputation for being more efficient than other investors among policy makers practitioners and scholars however due to the limited availability of specific financial data previous research has barely assessed the impact of angels on companies performance this paper seeks to bridge this gap by providing evidence from a unique dataset made up of 432 angel backed french companies which are compared to two control groups one randomly selected and another one consisting of similar enterprises this double comparison process enables us to purge our analysis of structural effect and to demonstrate the importance of the methodology in generating the sample indeed the results we obtain significantly differ depending on the control group our results show that the positive influence of angels depends on the condition of the comparison the set of ba backed companies is more likely to exhibit superior performance when it is compared to a random sample whereas the companies performance is either identical or worse when it is compared to a sample composed of k nearest neighbors in addition using a quantile regression technique makes it possible to differentiate the effect of business angels based on the distribution of the value of the growth rate

rubinstein auctions on competition for bargaining partners abstract this paper analyzes the effect of competition for bargaining partners on the prices that prevail in thin markets as well as how the matches are simultaneously determined three trading processes or bargaining procedures are described in all the variants that we consider except for one case of public offers either there is no pure strategy subgame perfect equilibrium or such equilibria exhibit delay in reaching agreement journal of economic literature classification numbers c72 d43

coalitional bargaining with competition to make offers abstract the paper analyzes a simple discrete time noncooperative coalitional bargaining game in which at each stage there is a contest for the right to make a proposal the pure stationary subgame perfect equilibrium payoff set is equal to the core journal of economic literature classification numbers 026

implementation of bargaining sets via simple mechanisms abstract we propose two simple mechanisms that implement two bargaining sets in super additive environments the first bargaining set is a close variation of the one proposed by l zhou 1994 games econom behav 6 512 526 and the second is the pareto optimum payoffs of the a mas colell 1989 j math econom 18 129 139 bargaining set we adopt a simple framework in which the cooperative outcomes are realized as non cooperative subgame perfect equilibria in pure strategies of a two stage game played by an auxiliary set of individuals competing over the cooperative agents journal of economic literature classification numbers c71 c72

competitive and cooperative inventory policies in a two stage supply chain we investigate a two stage serial supply chain with stationary stochastic demand and fixed transportation times inventory holding costs are charged at each stage and each stage may incur a consumer backorder penalty cost e g the upper stage the supplier may dislike backorders at the lower stage the retailer we consider two games in both the stages independently choose base stock policies to minimize their costs the games differ in how the firms track their inventory levels in one the firms are committed to tracking echelon inventory in the other they track local inventory we compare the policies chosen under this competitive regime to those selected to minimize total supply chain costs i e the optimal solution we show that the games nearly always have a unique nash equilibrium and it differs from the optimal solution hence competition reduces efficiency furthermore the two games equilibria are different so the tracking method influences strategic behavior we show that the system optimal solution can be achieved as a nash equilibrium using simple linear transfer payments the value of cooperation is context specific in some settings competition increases total cost by only a fraction of a percent whereas in other settings the cost increase is enormous we also discuss stackelberg equilibria

the nash bargaining solution in general n person cooperative games abstract we present a noncooperative foundation for the nash bargaining solution for an n person cooperative game in strategic form the nash bargaining solution should be immune to any coalitional deviations our noncooperative approach yields a new core concept called the nash core for a cooperative game based on a consistency principle we prove that the nash bargaining solution can be supported in every subgame by a stationary subgame perfect equilibrium of the bargaining game if and only if the nash bargaining solution belongs to the nash core

efficient coalitional bargaining with noncontingent offers abstract a new feature pertaining to proposer s ability to implement offers is introduced in the extensive form bargaining mechanism studied in okada 1996 this mechanism is used to analyze the coalitional setting of strictly supermodular games the new feature in the mechanism is that the proposer has a choice to implement his proposal with any subset of responders who have accepted it thus the institutional feature of every responder has veto power is relaxed here it is shown that for all sufficiently high discount factors there exists an efficient subgame perfect equilibrium in pure stationary strategies sspe whose limiting outcome is the core constrained nash bargaining solution moreover all efficient sspe are payoff equivalent in the limit as 1

the coalitional nash bargaining solution the coalitional nash bargaining solution is defined to be the core allocation for which the product of players payoffs is maximal we consider a non cooperative model with discounting in which one team may form and every player is randomly selected to make a proposal in every period the grand team consisting of all players generates the largest surplus but a smaller team may form we show that as players get more patient if an efficient and stationary equilibrium exists it must deliver payoffs that correspond to the coalitional nash bargaining solution we also characterize when an efficient and stationary equilibrium exists which requires conditions that go beyond the nonemptiness of the core

spatial patterns of canadian venture capital investment mcnaughton r b and green m b 1989 spatial patterns of canadian venture capital investment reg studies 23 9 18 this paper explores the spatial pattern of canadian venture capital investment surveys of both venture capital investors and their portfolio firms provide new insights into this rapidly expanding industry venture capital investors are shown to be highly concentrated and regionally biased in their portfolio selections log linear analysis demonstrates a significant regional variation in the industrial sector characteristics of portfolio firms the pattern of canadian venture capital investment is interpreted as the aggregate result of the efforts of venture capitalists to minimize uncertainty and reduce the inherent risk of their ventures prospects for continuing research are discussed mcnaughton r b et green m b 1989 la distribution geographique du capital risque canadien reg studies 23 9 18 cet article examine la distribution geographique du capital risque canadien des

harsanyi values of large economies nonequivalence to competitive equilibria abstract we consider economies with many agents and compare the competitive equilibria and the value allocations of the resulting coalitional games in particular we provide a smooth and robust example where the value principle does not hold for the harsanyi ntu value there is a unique competitive equilibrium which however does not belong to the nonempty set of harsanyi value allocations journal of economic literature classification numbers c71 d51

broader product line a necessity to achieve success strategic product line breadth decisions evoke differential responses from the manufacturing and the marketing areas manufacturing prefers keeping process disruptions to a minimum and as a result discourages product proliferation however marketing in its attempt to match products to heterogeneous consumer needs and gain market share emphasizes a broader product line we systematically investigate the market benefits and cost disadvantages of broader product lines on a large sample of over 1 400 business units our results indicate significant market share benefits and increases in firms profitability with broader product lines moreover widely held beliefs of increases in production costs are not empirically supported american manufacturing firms may indeed be flexible enough to accommodate product variety without significant detrimental effects on costs

the growth and geographical anatomy of venture capitalism in the united kingdom martin r l 1989 the growth and geographical anatomy of venture capitalism in the united kingdom reg studies 23 389 403 the 1980s have seen the emergence and rapid growth of venture capitalism in the uk this paper examines this growth both in terms of the spatial organization of the venture capital industry and the regional distribution of venture capital investment the picture that emerges is of an industry which is over centralized in the london area and which in the course of its recent development has tended to concentrate investment in the already more prosperous southeastern and adjacent parts of the country while local venture capital markets are beginning to become established in northern britain it will be some time before the existing regional imbalance is likely to be redressed martin r l 1989 la croissance et la distribution geographique du capital risque au royaume uni reg studies 23 389 403 les annees 1980 ont temoigne de la naissance et de l essor du capital risque au

bargaining and cooperation in strategic form games in this paper we view bargaining and cooperation as an interaction superimposed on a game in strategic form a multistage bargaining procedure for n players the proposer commitment procedure is presented it is inspired by nash s two player variable threat model a key feature is the commitment to threats we establish links to classical cooperative game theory solutions such as the shapley value in the transferable utility case however we show that even in standard pure exchange economies the traditional coalitional function may not be adequate when utilities are not transferable jel c70 c71 c78 d70

a simple selling and buying procedure abstract for the assignment game we analyze the following mechanism sellers simultaneously fix their prices first then buyers sequentially decide which object to buy also each buyer may report his or her indifferences along with the previous buyers indifferences to the following buyer the first phase determines the potential prices while the second phase determines the actual matching reporting truthfully the indifferences is always a dominant strategy for the buyers moreover when buyers state their true indifferences the subgame perfect equilibria outcomes of the mechanism correspond to the maximum equilibrium price vector together with optimal matchings journal of economic literature classification numbers c78 d78

a comment on the nash program and the theory of implementation abstract the nash program for cooperative games is made compatible with the framework of the theory of implementation it is shown that the core is the only major cooperative solution that is maskin monotonic the mechanisms in the nash program are adapted into our model closer to that of the theory of implementation

bargaining and bargaining sets abstract we argue that in exchange economies various versions of the bargaining set cannot be implemented in nash equilibrium we then propose an extensive form mechanism that exactly implements the aumann davis maschler bargaining set in subgame perfect equilibrium the mechanism corresponds closely to the description of the bargaining set and respects feasibility in and out of equilibrium journal of economic literature classification numbers c71 c72 c78 d51

the role of inventory in delivery time competition the paper operationalizes the notion of shortage cost by considering the behavior of customers and competing firms and examines the role of inventory in response time competition we start with a single firm production control model in which customers are characterized by their preferences of price quality and delivery time the optimal production inventory policy and the optimal choice between make to order and make to stock operations are determined in simple newsboy like formulas the basic model is then extended to an n firm market game in which firms compete for orders from the aspect of early delivery one could think of this setting as an oligopoly racing market the analysis shows that competition can breed a demand for produce to stock just as other economic phenomena such as economies of scale uncertainty or seasonality can induce make to stock and that delivery time competition increases the buyer s welfare while decreasing the producer s welfare

coalition theory and its applications a survey we survey some of the major advances in coalition theory in recent years we then look at the recent applications of the theory in the area of political economy and touch upon some important theoretical and applied open questions in the field

modeling the role of retail price formats and retailer competition types on production schedule strategy abstract to study the determinants of choice between make to order mto and make to stock mts production scientists have traditionally focused on production specific factors however the choice can be also influenced by marketing specific factors such as the pricing strategy of retailers this paper therefore develops a modeling framework to link the determination of the optimal production strategy of mts mto to the retailing strategy of edlp hilo we characterize an optimal production strategy as one that maximizes total system wide profits in a centralized system we show that the optimum production strategy would depend on whether the manufacturer is delivering to an every day low pricing edlp store or to a high low pricing store hi lo additionally the production plan is demonstrated to be a function of the nature and type of competition in the market in particular we study the duopoly model of competition under both bertrand and stackelberg conjectures

conflict leads to cooperation in demand bargaining abstract we consider a multilateral nash demand game in which short sighted players come to the bargaining table with requests for both coalition partners and the potentially generated resource we prove that the resulting process converges with probability one to a state in which all players agree on a strictly self enforcing division of resources i e a strict core allocation highlighting group dynamics we show how the myopic actions of players may lead to the break up of groups in the short run but can ultimately bring about a situation from which a strictly self enforcing allocation can be reached

altruistic investment decision behavior in early stage ventures in this study we develop and test a gendered social capital model of altruistic investment behavior that explains why some informal investors expect high returns on their investments while others expect no payback at all prior literature predominantly assumes that informal investors engage in investment activities with a return on investment and profit in mind however other non financial objectives for informal investment e g altruistic informal investment have also been suggested although their antecedents unexplored we suggest altruistic investment behavior depends on life circumstances determined by social capital gender and their combination our empirical evidence supports these propositions

a non cooperative bargaining model with strategically timed offers abstract rubinstein s alternating offers bargaining model is enriched by allowing players to choose when and whether or not to make an offer time is continuous and players make offers whenever they wish it is assumed that upon making an offer players must wait a fixed amount of time before making another it is shown that if players can react arbitrarily quickly to their opponent s offers then all subgame perfect equilibrium outcomes are rubinstein like in particular efficient however if it takes time to react then some delay can be supported this potential delay becomes arbitrarily large as reaction times increase journal of economic literature classification numbers c78 c72

implementation in the many to many matching market abstract this paper deals with a discrete many to many matching market of firms and workers we analyze the following mechanism firms announce the set of workers they want to hire then workers select the set of firms with which they want to work the first phase of the game determines the potential partners while the second phase determines the actual matching we prove that subgame perfect nash equilibria spne always exist while strong equilibria se may not exist we characterize the spne outcomes as the pairwise stable matchings and show that there may be no spne outcome in the core when the preferences of the agents are not maximin however when the preferences of the firms respectively workers are maximin the core always contains the equilibrium outcomes

what drives micro angel investments despite of the significant role of informal venture capital in the financing of new entrepreneurial ventures there is little research explaining the factors determining the propensity of individuals to make microangel investments building on two theoretical frameworks a social psychological theory of planned behavior and an economic theory on the determinants of demand for risky assets in household portfolios we develop a set of hypotheses predicting the propensity of individuals to make informal investments in new businesses owned by others in our analysis we test whether the determinants of micro angel investments are similar when investing in a business owned by a close family member versus more distant business the hypotheses are tested using data from 6007 interviews of finnish adults carried out in the global entrepreneurship monitor program in 2000 2002 the findings show that the theoretical frameworks have more power in explaining investments in firms not owned by close family members the study provides new understanding of the differences in the drivers of different types of micro angel investments

subgame perfect cooperation in an extensive game abstract we propose a new solution concept for games in extensive form that incorporates both cooperation and subgame perfection from its definition and properties the new solution concept named the subgame perfect core is a refinement of the core of an extensive game in the same sense as the set of subgame perfect nash equilibria is a refinement of the set of nash equilibria to further characterize the subgame perfect core we show that each subgame perfect core payoff vector can be implemented as a non cooperative solution as it is a subgame perfect nash equilibrium payoff vector of an extensive form game that is closely related to the original game we also motivate and introduce a related concept of subgame perfect strong nash equilibrium of an extensive game that is coalition proof

coalition formation in non democracies we study the formation of a ruling coalition in non democratic societies where institutions do not enable political commitments each individual is endowed with a level of political power the ruling coalition consists of a subset of the individuals in the society and decides the distribution of resources a ruling coalition needs to contain enough powerful members to win against any alternative coalition that may challenge it and it needs to be self enforcing in the sense that none of its subcoalitions should be able to secede and become the new ruling coalition we present both an axiomatic approach that captures these notions and determines a generically unique ruling coalition and the analysis of a dynamic game of coalition formation that encompasses these ideas we establish that the subgame perfect equilibria of the coalition formation game coincide with the set of ruling coalitions resulting from the axiomatic approach a key insight of our analysis is that a coalition is made self enforcing by the failure of its winning subcoalitions to be self enforcing this is most simply illustrated by the following example with majority rule two person coalitions are generically not self enforcing and consequently three person coalitions are self enforcing unless one player is disproportionately powerful we also characterize the structure of ruling coalitions for example we determine the conditions under which ruling coalitions are robust to small changes in the distribution of power and when they are fragile we also show that when the distribution of power across individuals is relatively equal and there is majoritarian voting only certain sizes of coalitions e g with majority rule coalitions of size 1 3 7 15 etc can be the ruling coalition copyright 2008 wiley blackwell

venture capital high technology and regional development florida r l and kenney m 1988 venture capital high technology and regional development reg studies 22 33 48 this paper explores the role of venture capital in technological innovation and regional development both aggregate data and a unique firm level data base are employed to determine the location of major centres of venture capital flows of venture capital investments and patterns of investment syndication or coinvestment among venture capital firms three major centres of venture capital are identified california san francisco silicon valley new york and new england massachusetts connecticut as well as three minor venture capital centres illinois chicago texas and minnesota venture capital firms are found to cluster in areas with high concentrations of financial institutions and those with high concentrations of technology intensive enterprises venture capital firms which are based in financial centres are typically export oriented while those in technology centres tend t

continuous time games of timing abstract we address the question of existence of equilibrium in general timing games with complete information under weak assumptions any two player timing game has a markov subgame perfect e equilibrium for each e 0 this result is tight for some classes of games symmetric games games with cumulative payoffs stronger existence results are established

formal versus informal legislative bargaining we study how the formality of a bargaining procedure affects its outcome we compare a formal baron ferejohn bargaining procedure to an informal procedure where players make and accept proposals in continuous time both constitute non cooperative games corresponding to the same bargaining problem a three player median voter setting with an external disagreement point this allows us to study formality in the presence and absence of a core and provides a natural explanation for the effects of preference polarization our results show that polarization hurts the median player and that formality matters the median player is significantly better off under informal bargaining

consistent solutions for cooperative games with externalities in order to calculate the worth of a coalition of players the coalition needs to predict the actions of outsiders we propose that for a given solution concept such predictions should be made by applying the solution concept to the reduced society consisting of the non members we illustrate by computing the r core for the case of bertrand competition with differentiated commodities

cooperation in strategic games revisited for two person complete information strategic games with transferable utility all major variable threat bargaining and arbitration solutions coincide this confluence of solutions by luminaries such as nash harsanyi raiffa and selten is more than mere coincidence staying in the class of two person games with transferable unility the article presents a more complete theory that expands their solution specifically it presents 1 a decomposition of a game into cooperative and competitive components 2 an intuitive and computable closed form formula for the solution 3 an axiomatic justification of the solution and 4 a generalization of the solution to games with private signals along with an arbitration scheme that implements it the objective is to restart research on cooperative solutions to strategic games and their applications jel codes c71 c72 c78 copyright 2013 oxford university press

transparency complementarity and holdout this paper characterizes the conditions under which holdout i e bargaining inefficiency may or may not be significant in a two sided one buyer many seller model with complementarity we address this problem in a very general setup with a bargaining protocol that is symmetric and allows for both publicly observable as well as secret offers and a technology that allows for variable degrees of complementarity the central insight is that the transparency of the bargaining protocol formalized by whether offers are publicly observable or secret as well as the extent of complementarity play a critical role in generating efficiency even with perfect complementarity holdout seems to be largely resolved whenever the bargaining protocol is public but not if it is secret further irrespective of the bargaining protocol holdout is resolved if the marginal contribution of the last seller is not too large

pairwise trade and coexistence of money and higher return assets abstract a new theory of coexistence of money and higher return assets is set out it applies to any setting in which some trade involves an exchange of goods for assets and occurs between two people a buyer and a seller we show that there exists a function mapping the portfolios of the buyer and the seller to the trade that occurs such that i the trade is in the buyer seller core and ii some people are induced to enter the buyer seller meeting with money

a noncooperative view of coalition formation and the core a noncooperative implementation of the core is provided for games with transferable utility the implementation obtained here is meant to reflect the standard motivation for the core as closely as possible in the model proposed time is continuous this idealized treatment of time is most amenable for capturing an essential feature of the core there is always time to reject a noncore proposal before it is consumated

venture capital and high technology entrepreneurship abstract venture capital clearly plays an important role in high technology entrepreneurship the purpose of this article is to explain the differences among various venture capital complexes focusing on where venture capital is important to innovation and entrepreneurship and conversely where it is not we do so through an empirical and historical examination of the seven most important venture capital complexes california san francisco silicon valley massachusetts boston new york illinois chicago texas connecticut and minnesota minneapolis we establish a three part tripartite typology for explaining the differences between these venture capital complexes 1 technology oriented complexes are located close to concentrations of high technology intensive businesses invest most of their funds locally and are net attractors of capital 2 finance oriented complexes are located around financial institutions and export their capital and 3 hybrid complexes mix characteristics of both technology and finance oriented venturing our findings have a series of important practical implications although venture capital is not absolutely necessary to facilitate high technology entepreneurship well developed venture capital networks provide tremendous incentives for entrepreneurship by lowering the difficulties of entering an industry venture capitalists use both their experience and their contacts to reduce many of the information and opportunity costs associated with new business formation the importance of contact networks and information to both deal flow and investment monitoring goes a low way toward explaining why venture capitalists cluster tightly together the availability of venture capital also attracts entrepreneurs and high quality personnel to a region creating a virtuous circle of new enterprise formation innovation and economic development private nonprofit and subsidized public efforts aimed at providing venture capital and stimulating high technology entrepreneurship must confront the fact that venture capital alone will not magically generate entrepreneurship and economic development it is important that such efforts recognize the nonfinancial side of venture investing and attract experienced personnel who can tap into established entrepreneurial networks and secure coinvestors more significantly establishing public venture funding in an area lacking the requisite entrepreneurial climate or technology infrastructure may create a catch 22 situation where locally oriented funds invest in bad deals or where venture capital is simply exported to established high technology regions

negotiations in multi issue committees abstract we propose a non cooperative bargaining approach to the problem of collective decision making in committees by modelling this process as a sequential bargaining game the main objective of the paper is to discuss the formation of the agenda in multi issue committees and its relation to the importance of the issues we start by asserting that in the case of a single issue the set of all equilibrium outcomes of our game coincides with the set of coalitional stable outcomes we then consider multi issue committees to discuss the problem of forming agendas we argue that from the point of view of efficiency and stability the most important issues should be put first on the agenda we conclude with a sufficient condition on players preferences which guarantees the efficiency and stability of the bargaining outcomes for every possible agenda

regional determinants of small firm loans under the u k loan guarantee scheme the loan guarantee scheme was initiated in 1981 in order to alleviate a perceived constraint in the ability of small firms to secure bank finance due to a lack of collateral this paper shows that a national small firms support scheme has at the point of delivery had quite different coverage across regions briefly the initial evidence suggests that the northern regions of england have been the major net beneficiaries of the scheme primarily at the expense of northern ireland and scotland further analysis identified house prices as the single most important determinant of loan size acting via a collateral effect on loan numbers and value fixed regional effects were dominant particularly in the south east and north west

informal risk capital investors investment patterns on the east coast of the u s a abstract in this study we profile a group of informal investors their investment criteria and the nature of their referral network the study supports the findings of several earlier studies it indicates the existence of an extensive informal investment community on the east coast of the u s a which can provide substantial financial resources to startup and young firms a full 58 of the sample investments were in startups a huge proportion compared with formal venture capital sources the study further supports earlier findings that this group is difficult to locate for entrepreneurs and researchers alike this opaque market consists primarily of friends and business colleagues who individually provide modest sums of money 20 000 50 000 but are often able to use their network to assemble a group of investors who will sponsor the entire funding requirement 130 informal investors report that in three years they and their networks raised 38 million dollars to support 286 new venture proposals there are also encouraging indications that these angels are both enthusiastic and persistent many of them claim that they have achieved higher returns via angel activity than any other investment options that they have tried of the angels who did better with alternative investment options more than 80 are still prepared to make further investments even those who reported failed investments in the informal risk capital market remain supportive over 65 indicate a willingness to invest again the criteria by which the angels screen the proposals differ markedly from those of the venture capital community in particular the angels do not appear to be interested in a thorough business plan a sine qua non for venture capitalists unlike the capital firms angels are not interested in competitive insulation they do not limit their investments to industries that are appealing or with which they are familiar nor do they care very much about the degree to which the entrepreneur has identified competition however they are in close agreement with the venture capital community in their concern with the management ability of the venture team and a requirement that there be a clear demonstrated need for the product or service preferably in a market with large potential the study has shed some light on the structure of the referral networks of angels though we do not know from this study how the respondents themselves first heard of the ventures that were described in this survey we do know that their referral network is composed primarily of friends and business colleagues to whom they refer as much as 60 of the proposals that they receive and in which they themselves eventually invest thus they pass on serious opportunities to their network their referees are inclined to be very supportive in our sample almost 75 of them also invested in the venture the current strategy for informal investors is to approach mainly close contacts these are inclined to be supportive 85 also invested in the venture and to follow a trusting investment behavior pattern relying mainly on the recommendation of the angel this strategem ensures that the total capital requirements are met via the network however given the results of this study the angels might be well advised not to stop here they might also approach at least one professional only a small proportion of professionals were approached by our sample of angels less than 30 as the study shows professionals are more effective at selecting successful ventures thus a mixed strategy may be called for use mainly trusting referees to ensure full capitalization and a limited number of professional referees to screen the proposals this will help ensure that those proposals that do get supported by the more trusting members of the network have been competently screened thus increasing to the probability of venture success a discriminant analysis revealed some useful pointers in helping the informal investor select successful ventures first it is critical to select only ventures in which the entrepeneur can be relied on to evaluate the risks of the ventures and manage these risks well angels do not need entrepreneurs that will gamble with their money equally important is to avoid placing too much credence on highly articulate sales pitches by the venture team or too much reliance on ventures in which the main emphasis is on product and proprietary protection rather insist on being shown clear evidence that the product or service has channel and or market acceptance it is also important for angels to stick to investments where they know the industry well and to back venture teams with a solid reputation and a propensity to get involved in the details rather than gloss them over as in the case of studies of venture capital investments competitive insulation in the early stages of the venture is also important

a theory of gradual coalition formation we study noncooperative multilateral bargaining games based on underlying tu games in which coalitions can renegotiate their agreements we distinguish between models in which players continue to bargain after implementing agreements reversible actions and models in which players who implement agreements must leave the game irreversible actions we show that renegotiation always results in formation of the grand coalition if actions are reversible but that the process may otherwise end with smaller coalitions on the other hand we show that the grand coalition cannot form in one step if the core of the game is empty irrespective of the reversibility of actions agreements between players form the basis of much that game theory seeks to explain there are obviously many useful ways to categorize such agreements in multilateral negotiations that is with more than two participants it seems natural to distinguish between cases in which the coalition forms in one step and those in which the coalition grows to its eventual size by attracting new members thus recipients of marshall aid collectively agreed to american terms at the ceec in 1947 whereas a strict subset of these countries agreed to the schuman plan in 1950 with the other current members joining the eu over time similarly negotiations on climate change culminated in universal agreement at rio in 1992 whereas india and china only agreed to reduce cfc emissions in london in 1990 after other countries had signed up to the montreal protocol finally un security council resolution 242 urged that a multilateral conference be set up to establish a comprehensive settlement in the middle east whereas the process initiated by the oslo agreements and arguably camp david has consisted of a sequence of agreements between israel and its neighbours we will refer to cases in which the grand coalition forms in one step as involving immediate coalition formation or icf for short and cases in which a coalition grows as involving gradual coalition formation

international perspectives on the supply of informal venture capital abstract despite major changes in the number and range of sources of finance for new and small ventures in the united kingdom in recent years there continues to be a shortage of risk capital for ventures actively seeking external equity finance in the united states the informal venture capital market plays a major role in filling this equity gap particularly in the early stages of venture development however there is little comparable information on the size of the informal venture capital pool in the united kingdom or other european economies despite recent recognition that the apparent underdevelopment of this market in the u k represents a major barrier to the development and growth of new ventures this paper therefore presents the first analysis of the informal venture capital market in the u k and compares the characteristics and attitudes of u k informal investors with those in the u s the data reported in this paper have been obtained from a combination of postal survey and snowball sample techniques that generated useable information from 86 informal investors informal investors are playing an important role in venture financing in the u k in three ways they make small scale investments in new and early stage ventures where the equity gap is most significant they are more permissive in their financing decisions than the formal venture capital industry in terms of having lower rejection rates longer exit horizons and lower target rates of return and they invest locally and can thereby close the regional equity gap arising from the overconcentration of venture capital investment in the core south east region in the u k in terms of demographics u k informal investors share many of the characteristics of north american informal investors they are predominantly male with an entrepreneurial background financially well off without being super rich and identify investment opportunities from friends and business associates there are a number of key differences that may be attributable to differences in contextual factors such as personal tax regimes regulatory environments wealth distribution and the structure of the formal venture capital and ipo markets for example u k informal investors are significantly older than those in the u s reflecting the influence of higher u k tax rates on the rate of capital and wealth accumulation more generally in comparison to u s investors u k informal investors have more investment opportunities brought to their attention seriously consider more proposals but invest in no more opportunities operate independently with syndication and joint investment relatively uncommon reducing the average total investment per financing round available to ventures fail to identify entrepreneurs themselves as a primary source of information on investment opportunities have higher rate of return and capital gains expectations are slightly less patient investors and are rather less satisfied with the overall performance of their informal investment portfolios reflecting intercountry and intertemporal variations in investment climate and conditions it appears therefore that the general inefficiency of the informal capital market identified by wetzel 1987 which reflects the invisibility of informal investors the fragmented nature of the market and the imperfect channels of communication between investor and entrepreneur is compounded in the u k case the extent to which this reflects contextual differences on the one hand or simply a slower developmental process in the u k will only be common methodological basis based on the evidence presented in this paper however a key conclusion is that the information networks available to u k informal investors are less effective than those in north america and in particular appear to contain lower quality information and a higher degree of redundant information specific forms of intervention in the market by for example stimulating the flow of information through the promotion of informal investment networking and brokerage services along the lines of u s and canadian examples such as vcn and coin therefore appear defensible

supermarket competition the case of every day low pricing every day low pricing edlp strategy has proved to be a successful innovation resulting in higher profits to supermarkets adopting it in competition with promotional pricing promo conventional wisdom attributes this success either to lower costs or to edlp better serving time constrained consumers while discouraging cherry pickers who seek promotions however it is unclear that such cost savings are being fully realized since edlp stores also engage in price promotions also continued existence of promo stores means that costs are not the only factor and they compete effectively without relying just on the cherry pickers furthermore experimental evidence suggests that a supermarket cannot obtain higher profits by merely setting constant low prices leading to the question exactly what makes edlp successful this question is of particular relevance to both academics and practitioners who have been intrigued by the success of this retailing strategy more generally the retailing issues addressed in this paper the economic analysis of competition and the empirical findings should be of interest to the broader community of researchers and managers we investigate the factors contributing to edlp s success by analyzing the competition between supermarkets through a game theoretic analysis of a market consisting of both time constrained consumers and cherry pickers key features of our model are consumers shop and purchase a basket of goods based on price announcements by stores and rational expectations of unannounced prices stores carry more than one good and compete through prices service convenience and appropriate communication strategies and no exogenous cost asymmetries we derive the conditions under which retailers choosing different strategies edlp and promo is a perfect nash equilibrium our analysis shows that the edlp store s offering of constant every day low prices is an equilibrium outcome endogenously determined successful implementation of the edlp strategy involves communication of relative basket prices implying that merely setting constant low prices is not viable we further demonstrate that while time constrained consumers find every day low prices at edlp attractive and cherry pickers the promotions at promo clientele effects are in fact more complicated specifically in equilibrium the promo store offers a higher service level as desired by time constrained consumers and the edlp store a lower service level in keeping with the needs of cherry pickers this choice of service by the two stores results in a cleaner segmentation of the market the higher relative basket price and service at the promo store results in a larger base of time constrained consumers to shop at the promo store and a larger base of cherry pickers to shop at the edlp store even though some cherry pickers continue to visit the promo store to avail of the price specials in this way our results contradict the conventional wisdom on edlp strategy as being mainly geared towards time constrained consumers finally industry profits are higher in an edlp promo equilibrium than when stores adopt identical strategies our analysis and results also offer a more complete characterization of the edlp and promo strategies indeed we show that edlp and promo strategies are positioning strategies rather than merely pricing strategies with different elements price promotions service and communications while the edlp store uses basket prices to attract both segments the promo store uses service and price specials to compete in the time constrained and cherry picking segment respectively given these different approaches of the two stores the communication strategies of the edlp and the promo stores emphasize these differences as well in this way we show as suggested by corstjens and corstjens 1994 that positioning in a retail context involves developing multidimensional strategies appealing to all segments while each element of the strategy may focus on a different consumer segment this is in contrast to the traditional view of segmentation in which different products in a product line for example are designed to appeal to different segments we complete the analysis by examining the data from the trade press and a survey conducted in a major metropolitan area these data while limited in scope support our theoretical results

business angel networks and the development of the informal venture capital market in the u k is there still a role for the public sector business angel networks bans provide a channel of communication between private venture capital investors business angels and entrepreneurs seeking risk capital most operate locally on a not for profit basis with their costs underwritten by the public sector however the recent establishment of bans by private sector organisations in the u k has led to a questioning of the government s continuing role in the financing of bans this paper demonstrates that there are significant differences between public sector and other not for profit bans and private sector commercially oriented bans in terms of the investments that they facilitate private sector bans are primarily involved with larger later stage deals whereas investments made through not for profit bans are generally smaller involve start ups and other early stage businesses and are local the emergence of private sector bans has therefore not eliminated the need for public sector support for locally oriented networks

recontracting and stochastic stability in cooperative games abstract an evolutionary style model of recontracting is given which guarantees convergence to core allocations of an underlying cooperative game unlike its predecessors in the evolution learning literature this is achieved without assumptions of convexity of the characteristic function or a reliance on random errors the stochastic stability properties of the model are then examined and it is shown that stochastically stable states solve a simple and intuitive minimization problem which reduces to maximizing a rawlsian swf for a common class of utility functions in contrast to previous analyses the stochastically stable state is unique for a broad class of utility functions

sharing the surplus an extension of the shapley value for environments with externalities economic activities both on the macro and micro level often entail wide spread externalities this in turn leads to disputes regarding the compensation levels to the various parties affected we propose a method of deciding upon the distribution of the gains costs of cooperation in the presence of externalities when forming the grand coalition is efficient we show that any sharing rule satisfying efficiency linearity dummy player and a strong symmetry axioms can be obtained through an average game adding an additional axiom we identify one unique rule satisfying these properties