brand equity and vertical product line extent this paper addresses the question of how the vertical structure of a product line relates to brand equity does the presence of premium or high quality products in a product line enhance brand equity conversely does the presence of economy or low quality products in a product line diminish brand equity economists and marketing researchers refer to variation in quality levels of products within a category as vertical differentiation whereas variation in the function or category of the products is referred to as horizontal differentiation much of the existing research on the relationship between product line structure and brand equity has focused on the horizontal structure of the product lineand has been primarily concerned with brand extensions what happens when the product line of a brand is extended horizontally into new categories researchers have been concerned primarily with how the extension fares but the effect of the extension on the core products is also important there is an analogous question of what happens when the product line of a brand is extended vertically either up market or down market this question of vertical extensions is part of the more general issue of how the vertical structure of a product line relates to brand equity the specific research questions addressed in this paper are 1 do premium or high quality products enhance the brand equity associated with the other products in the line 2 conversely do economy or low quality products diminish the brand equity associated with the other products in the line these research questions are relevant to three managerial issues in product line strategy first what are the costs and benefits of including down market products within a brand second what are the implications of including high end models within a brand third when should high end and low end products be offered under an existing brand umbrella and when should these products be offered under separate brands we address these research questions empirically through an analysis of the models and brands within the u s mountain bicycle industry we use price premium above that which can be explained by the physical characteristics of the bicycle as a metric for brand equity we then test several hypotheses related to the relationship between extension of the product line upward and downward and the price premium commanded by the brand we further support this analysis with a simple laboratory experiment the analysis reveals that price premium in the lower quality segments of the market is significantly positively correlated with the quality of the lowest quality model in the brand s product line and that for the upper quality segments of the market price premium is also significantly positively correlated with the quality of the highest quality model in the brand s product line the results of the analysis are supported by the outcome of an experiment in which 63 percent of the subjects preferred a product offered by a high end brand to the equivalent product offered by a low end competitor these results imply that managers wishing only to maximize the equity of their brands would offer only high quality products and avoid offering low quality products however this result must be moderated by the overall objective of maximizing profits maximizing profits is likely to involve a tradeoff between preserving high brand equity and therefore high margins and pursuing the volume typically located in the lower end of the market one of the most significant implications of this research is that product line managers need to be mindful not just of the incremental cannibalization or stimulation of sales of products that are immediate neighbors of an extension to the product line but also the effect of such an extension on the brand equity in other possibly quite different parts of the product line

economic feasibility of biomass gasification for power generation in three selected communities of northwestern ontario canada abstract biomass gasification is expected to be an attractive option among other competitive applications of biomass conversion for bio energy this study analyzes economic feasibility of biomass gasification power generating plants in three selected communities ignace nipigon and kenora of northwestern ontario the major variables considered in the model are harvesting and handling costs logistic costs for biomass feedstock delivery and storage capital costs of power plant by scales operation and maintenance costs labor costs capital financing costs and other regulatory costs gis analysis was undertaken to estimate the distance class matrix to apportion the biomass feedstock supply side from different forest management units total cost per mw h power production at a 50 mw scale ranges from cad 61 89 to cad 63 79 total cost per unit of electricity production decreases significantly as plant capacity increases due to economy of scale in the production system further the locations of plants explained the cost variability

the effects of policy incentives in the adoption of willow short rotation coppice for bioenergy in sweden abstract the effect of policy incentives in the development of short rotation willow plantations for bioenergy is studied by using an aggregate adoption model based on sigmoidal curves for the swedish municipalities a total of 56 municipalities were studied with 891 farmers that planted willow during the period 1986 1996 the model included variables related to the subsidies applied the taxation on fossil fuels the development of the wood fuel consumption by the district heating systems and the geographical and socio economic characteristics of the municipality results of the simulations using the model show an increment of almost 70 of farmers planting willow during the period studied when the subsidy and tax incentives and the increments of the wood fuel capacity by the district heating system took place this study gives tools for future policy implementations in order to achieve the goals of the energy strategies

leadership by example in the weak link game we investigate the effects of leadership in a four player weak link game a weak link game is a coordination game with multiple pareto ranked nash equilibria because the more efficient equilibria involve a degree of strategic uncertainty groups typically find it difficult to coordinate on more efficient equilibria we wanted to see whether leadership by example in the form of one player acting publicly before the rest of the group could help groups do better our results suggest that leadership can increase efficiency but is far from being a guarantee of success specifically in a significant number of groups we observed successful leadership and increased efficiency but in most groups efficiency was low despite the efforts of leaders we did not find any difference between voluntary leaders and leaders that are randomly assigned

equilibrium selection in static and dynamic entry games abstract we experimentally assess the predictive power of two equilibrium selection principles for binary n player entry games with strategic complementarities in static entry games we test the theory of global games which posits that players play games of complete information as if they were playing a related global game of incomplete information by contrast in dynamic n period entry games the efficient subgame perfect equilibrium prediction is for all to enter whenever the payoff relevant state variable exceeds a certain threshold the subgame perfect entry threshold of the dynamic game will generally differ from the global game threshold of the static version of the same game nevertheless our experimental findings suggest that entry thresholds are similar between static and dynamic versions of the same game an implication is that the modeling of entry games with strategic complementarities as static one shot games ignoring the dynamic element of such interactions may not be unreasonable

i m not a high quality firm but i play one on tv this article investigates the role of noise in a multidimensional signalling game a monopolist that offers a high or low quality product can signal its quality to consumers through its selection of price and advertising it is shown that when the advertising channel is noisy there is no separating equilibrium where the monopolist will simultaneously employ both signalling mechanisms advertising will take place only when price is uncorrelated to quality furthermore the noise complicates the process of consumer inference this enables a low quality firm to take advantage of consumer ignorance by partially mimicking the strategy of the high quality firm

it s what you say not what you pay an experimental study of manager employee relationships in overcoming coordination failure we study manager employee interactions in experiments set in a corporate environment where payoffs depend on employees coordinating at high effort levels the underlying game being played repeatedly by employees is a weak link game in the absence of managerial intervention subjects invariably slip into coordination failure to overcome a history of coordination failure managers have two instruments at their disposal increasing employees financial incentives to coordinate and communication with employees we find that communication is a more effective tool than incentive changes for leading organizations out of performance traps examining the content of managers communication the most effective messages specifically request a high effort point out the mutual benefits of high effort and imply that employees are being paid well

learning and capacity expansion under demand uncertainty a competitive dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied the main assumptions are that entry is sequential that it occurs under imperfect information on the size of the market and that better information becomes available as time goes on the gradual improvement in information is due to the fact that later waves of entrants are able to observe the profitability of earlier entrants the major results reported here under suitable restrictions are that the equilibrium rate of entry is monotonically decreasing over time and that at any given point in time it is smaller than the socially optimal one when a new market opens as a result of a product being newly invented for instance or when an existing market starts to expand uncertainty with respect to its size is likely to prevail as a result of this uncertainty entry of firms into such markets typically will occur in waves some firms will enter initially while others will wait to see the consequences of that initial entry if the experience of early entrants is favourable entry will continue otherwise entry will cease hence with the introduction of a new product two phases are associated the growth phase typified by positive operating profits for existing firms and expansion of productive capacity due to entry of new firms and the mature phase typified by erosion of profits and fixed total productive capacity empiricists estimating the time pattern of investments during the growth phase have found an s shaped diffusion curve see mansfield 1986 and gort and klepper 1982 the purpose of the present paper is to theoretically characterize these time patterns and to investigate their welfare properties any attempt to model the type of entry described above must account for differences in both entry dates and resultant earnings in other words the theory must explain why the realized earnings of different cohorts of firms are not equal often such ex post differences are reconciled by assuming heterogeneity with respect to some latent underlying characteristic managerial ability for instance and attributing differences in earnings to differences in that characteristic in this paper instead earning differentials are attributable to luck only ex ante all firms are technologically identical and equally capable of forecasting market prospects and rationally acting upon those forecasts ex post some firms turn out to have entered at the right time and are for that reason more profitable the model developed in this paper analyzes a parametric example of a sequential entry problem in which the uncertainty over market size is gradually resolved over time in a bayesian setting in an environment of perfect competition and constant returns toscale a free entry equilibrium concept is introduced and the aggregate implications of the time path of investments are derived i then compare this actual time path to the optimum this comparison is interesting because the equilibrium is analysed under the

coordination and delay in global games abstract what is the effect of offering agents an option to delay their choices in a global coordination game we address this question by considering a canonical binary action global game and allowing players to delay their irreversible decisions those that delay have access to accurate private information at the second stage but receive lower payoffs we show that as noise vanishes as long as the benefit to taking the risky action early is greater than the benefit of taking the risky action late the introduction of the option to delay reduces the incidence of coordination failure in equilibrium relative to the standard case where all agents must choose their actions at the same time we outline the welfare implications of this finding and probe the robustness of our results from a variety of angles

an endogenous timing conflict game abstract we present an endogenous timing conflict game of incomplete information under strategic complementarity the model predicts multiple equilibria in which the outcome follows either a simultaneous move game baliga and sjostrom 2004 or a sequential game which improves social welfare we study the three families of games in the laboratory using gender balanced sessions our results suggest that i social welfare is higher in the endogenous timing and sequential games compared to the simultaneous game ii men and women make similar decisions in the simultaneous and sequential move games and iii in the endogenous timing game women are less willing to commit to the risky action

money talks an experimental investigation of cheap talk and burned money we experimentally study the strategic transmission of information in a setting where both cheap talk and money can be used for communication purposes theoretically a large number of equilibria exist side by side in which senders either use costless messages money or a combination of the two we find that senders prefer to communicate through costless messages only when the interest disalignment between sender and receiver increases cheap talk tends to break down and high sender types start burning money to enhance the credibility of their costless messages a behavioral model due to kartik 2009 assuming that sellers bear a cost of lying fits the data best

residential bioenergy heating a study of consumer perceptions of improved woodstoves abstract consumers choices play a key role for the development of biomass heating in the residential sector the city of oslo has granted subsidies to households who change to new improved low emission woodstoves the purpose of this study is to expand the knowledge about users experiences and attitudes to residential biomass heating an adapted model of the theory of planned behavior was used to model households inclination to continue using their woodstoves for heating more than 800 questionnaires were collected from households that recently had invested in an improved woodstove the respondents were satisfied with the new woodstoves the respondents also considered themselves competent to use and maintain the stove and few had problems acquiring fuelwood further analyses showed that the intention to continue to use the new woodstove depends on economic benefits heating performance perceived time and effort to operate the stove environmental effects of heating as well as perceived subjective norm the results imply that when marketing a modern technology for bioenergy heating both public authorities and producers should consider issues related to the users perception of subjective norm such as perceived status of using bioenergy or environmental concerns when designing campaigns to promote the use of woodstoves

dynamic global games of regime change learning multiplicity and the timing of attacks global games of regime change coordination games of incomplete information in which a status quo is abandoned once a sufficiently large fraction of agents attack it have been used to study crises phenomena such as currency attacks bank runs debt crises and political change we extend the static benchmark examined in the literature by allowing agents to take actions in many periods and to learn about the underlying fundamentals over time we first provide a simple recursive algorithm for the characterization of monotone equilibria we then show how the interaction of the knowledge that the regime survived past attacks with the arrival of information over time or with changes in fundamentals leads to interesting equilibrium properties first multiplicity may obtain under the same conditions on exogenous information that guarantee uniqueness in the static benchmark second fundamentals may predict the eventual fate of the regime but not the timing or the number of attacks finally equilibrium dynamics can alternate between phases of tranquility where no attack is possible and phases of distress where a large attack can occur even without changes in fundamentals

unique equilibrium in a model of self fulfilling currency attacks even though self fulfilling currency attacks lead to multiple equilibria when fundamentals are common knowledge we demonstrate the uniqueness of equilibrium when speculators face a small amount of noise in their signals about the fundamentals this unique equilibrium depends not only on the fundamentals but also on financial variables such as the quantity of hot money in circulation and the costs of speculative trading in contrast to multiple equilibrium models our model allows analysis of policy proposals directed at curtailing currency attacks

foreign direct investment exchange rate variability and demand uncertainty variable real exchange rates influence the location of production facilities chosen by a multinational with risk averse investors and fixed productive factors parent companies should not be indifferent to production location even with identical expected costs of production across countries if a nonnegative correlation exists between export demand and exchange rate shocks the multinational optimally locates some productive capacity abroad the capacity share abroad increases as exchange rate volatility rises and becomes more correlated with export demand shocks these results are confirmed using quarterly u s bilateral foreign direct investment flows with canada japan and the united kingdom copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

quality uncertainty and informative advertising we present a price signalling model with informative advertising a costly advertisement informs of the good s quality directly and therefore the seller determines the fraction of informed buyers endogenously we show that informative advertising only occurs in pooling equilibria for an advertising pooling equilibrium to exist consumer valuation for high quality advertising cost prior probability that quality is high and inaccuracy of the buyers pre purchase information must be sufficiently high for some parameters there is a unique undefeated advertising pooling equilibrium if advertising is used in equilibrium the adverse selection problem is mitigated

information manipulation coordination and regime change this article presents a model of information manipulation and political regime change there is a regime that can be overthrown but only if enough citizens participate in an uprising citizens are imperfectly informed about the regime s ability to resist an uprising and the regime can engage in propaganda that taken at face value makes the regime seem stronger than it truly is this coordination game with endogenous information manipulation has a unique equilibrium and the article gives a complete analytic characterization of the equilibrium s comparative statics holding fixed the number of signals available to citizens if the per unit signal precision is sufficiently high then the regime is harder to overthrow in contrast if the number of signals increases so that both total signal precision and the regime s costs of manipulation rise together then the regime is easier to overthrow unless there are strong economies of scale in information control

secrecy and safety we provide a model showing that the use of confidential settlement as a strategy for a firm facing tort litigation leads to lower average safety of products sold than would occur if the firm were committed to openness a rational risk neutral consumer s response in a market wherein a firm engages in confidential settlements may be to reduce demand a firm committed to openness incurs higher liability and r d costs though product demand is not diminished we identify conditions such that if the cost of credible auditing to verify openness is low enough a firm prefers to eschew confidentiality

future bioenergy trade in the eu modelling trading options from a cost effectiveness perspective the purpose of this paper is to analyse under what conditions with respect to co2 emission reduction and biofuels for transport targets the trading in the eu of co2 credits and solid and or liquid biofuels is cost effective from the perspective of an optimisation energy systems model we use the peep model covering the eu27 except bulgaria malta and cyprus to generate insights about the cost effectiveness of different options under different policy scenarios trade in co2 credits is a cost effective option in all relevant policy scenarios trade in some biofuels mainly from central and eastern european countries to the eu15 is cost effective in all assessed scenarios in the case of co2 targets whether national or at the eu level there is trade in solid biofuels when biofuels for transport targets are also implemented trading both solid and liquid biofuels is cost effective

bank runs as coordination failures an experimental study we use experimental methods to investigate what factors contribute to breakdowns in coordination among a bank s depositors subjects in our experiment decide whether to leave their money deposited in a bank or withdraw it early a bank run occurs when there are too many early withdrawals we explore the effects of adding uncertainty about fundamental withdrawal demand and of changing the number of opportunities subjects have to withdraw our results show that i bank runs are rare when fundamental withdrawal demand is known but occur frequently when it is stochastic and ii subjects are more likely to withdraw when given multiple opportunities to do so than when presented with a single decision for the multiple opportunity case we evaluate individual withdrawal decisions according to a set of simple cutoff rules we find that the cutoff rule corresponding to the payoff dominant equilibrium of the game which involves bayesian updating of probabilities explains subject behavior better than other rules

transforming the energy system why municipalities strive for energy self sufficiency abstract despite evidence that a rising number of municipalities in germany are striving for energy self sufficiency there is little understanding of the driving factors behind this development we investigate economic ecological social and energy system related factors that drive municipalities to strive for energy self sufficiency with a focus on electricity supply the empirical data for this study is based on insights generated through expert interviews n 19 with mayors energy experts and scientists as well as a quantitative study among mayors and energy officers n 109 of german municipalities results show that environmental awareness tax revenues and greater independence from private utilities are positively related to the mayors attitude towards the realization of energy self sufficiency furthermore citizens the political environment the mayor s political power and his her financial resources are relevant factors for a municipality striving for energy self sufficiency policymakers need to decide whether or not to support mayors in this development for suitable policy interventions the results suggest the importance of an integrated approach that considers a combination of identified factors finally we propose a morphological box to structure different aspects of energy self sufficiency and categorize the present study

measuring strategic uncertainty in coordination games this paper proposes a method to measure strategic uncertainty by eliciting certainty equivalents analogous to measuring risk attitudes in lotteries we apply this method by conducting experiments on a class of one shot coordination games with strategic complementarities and choices between simple lotteries and sure payoff alternatives both framed in a similar way despite the multiplicity of equilibria in the coordination games aggregate behaviour is fairly predictable the pure or mixed nash equilibria cannot describe subjects behaviour we present two global games with private information about monetary payoffs and about risk aversion while previous literature treats the parameters of a global game as given we estimate them and show that both models describe observed behaviour well the global game selection for vanishing noise of private signals offers a good recommendation for actual players given the observed distribution of actions we also deduce subjective beliefs and compare them with objective probabilities

socioeconomic implications of biofuels deployment through an input output approach a case study in uruguay abstract some countries in the world aim to increase biofuel production and consumption as a way to decarbonize the transport sector and transit to a low carbon economy besides their potential environmental advantages compared to conventional fuels biofuels may also bring other socioeconomic benefits using the input output analysis this study has looked at the socio economic impacts associated to the biofuels targets established in uruguay by estimating the associated gross and net effects on production of goods and services value added and job creation categorized into rural and non rural next the impacts on the uruguay s balance of payments energy security and tax revenues have been estimated and added to the previous effects when it comes to value added bioethanol from sugarcane ranks first among the considered biofuels with 431 million us 2018 followed by bioethanol from sorghum and biodiesel as to job creation around 34 000 full time new jobs are created as a result of sugarcane bioethanol twice as much as from biodiesel of these figures rural employment share represents a 13 and 6 in the case of sugarcane bioethanol and biodiesel respectively on concluding result from this study is that while biofuel production costs in uruguay are higher than fossil fuel when the economic effects on tax revenues and balance of payments are added to the previous socio economic impacts the total benefits from biofuels compensate the extra costs however this situation may be altered in the future as a result of changes in biofuel production costs fiscal policies as well as import and export prices variations

advertising as signal jamming abstract this paper considers a model of informative advertising that allows firms to jam the consumers signals on product quality before choosing prices at a second stage we find that the price competition at the second stage may overrule the basic insights from the signal jamming approach in other areas of application as a consequence a firm may advertise more intensely the higher is the difference of the expected product qualities moreover a firm s optimal advertising intensity can decrease with quality uncertainty

should i stay or should i go bandwagons in the lab abstract we experimentally investigate the impact of strategic uncertainty and complementarity on leader and follower behavior using the model of farrell and saloner 1985 at the core of the model are endogenous timing irreversible actions and private valuations we find that strategic complementarity strongly determines follower behavior once a subject decides to abandon the status quo the probability that other players jump on the bandwagon increases sharply however there is a reluctance to lead when leading is a conditional best response we explain this deviation from the neo classical equilibrium by injecting some noise in the equilibrium concept we also find that cheap talk improves efficiency

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

does advertising serve as a signal evidence from a field experiment in mobile search we develop a field experiment that assesses whether advertising can serve as a signal that enhances consumers evaluations of advertised goods we implement the experiment on a mobile search platform that provides listings and reviews for an archetypal experience good restaurants in collaboration with the platform we randomize about 200 000 users in 13 asian cities into exposure of ads for about 600 local restaurants within the exposure group we randomly vary the disclosure to the consumer of whether a restaurant s listing is a paid ad this enables isolating the effect on outcomes of a user knowing that a listing is sponsored a pure signalling effect we find that this disclosure increases calls to the restaurant by 77 holding fixed all other attributes of the ad the disclosure effect is higher when the consumer uses the platform away from his typical city of search when the uncertainty about restaurant quality is larger and for restaurants that have received fewer ratings in the past on the supply side newer higher rated and more popular restaurants are found to advertise more on the platform and ratings of those that advertised during the experiment are found to be higher two years later taken together we interpret these results as consistent with a signalling equilibrium in which ads serve as implicit signals that enhance the appeal of the advertised restaurants to consumers both consumers and advertisers seem to benefit from the signalling consumers shift choices towards restaurants that are better rated at baseline in the disclosure group compared to the no disclosure group and advertisers gain from the improved outcomes induced by disclosure

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

advertising and quality in the u s market for automobiles using data consisting of domestic and foreign automobiles over the period 1985 1990 the hypothesis that advertising serves as a signal of higher quality is empirically tested this is accomplished by examining how advertising levels vary with a quality measure that is not observable at the time of purchase but becomes available subsequent to a model s release above average quality results in expenditures that are 15 higher than average quality outlays lending further support to the signalling hypothesis the positive advertising quality relationship holds strongest when a model significantly improves in quality relative to the previous year s model

a microeconomic analysis of decentralized small scale biomass based chp plants the case of germany alternative energy sources such as biomass chp plants have recently gained significantly in importance and action is due both on the large scale corporate level and on the small scale hence making the scope and economic outline of such projects easily intelligible without losing relevant details seems a key factor to further promote the necessary developments the model setup presented in this paper may therefore serve as a starting point for generating numerical results based on real life cases or scenarios its focus lies on the economic analysis of decentralized biomass chp plants it presents a new approach to analyzing the economic aspects of biomass chp plants implementing a formal microeconomic approach as germany claims a leading role in the market for renewable energy production the paper also takes a closer look on the effects of german energy policy with respect to biomass chp plants

coordination failures and government policy a model with applications to east asia and eastern europe abstract poor countries must specialize in standardized labor intensive commodities middle income countries may have a richer menu of options if their labor force is reasonably well educated and skilled the multiplicity of equilibria is due to a coordination problem inherent in activities that require specialized inputs if no intermediate inputs are presently produced there may be little incentive for any single firm to do so on its own the economy may get stuck in a low wage low tech equilibrium an investment subsidy or a minimum wage policy can enhance welfare by moving the economy to a superior equilibrium

pricing strategy quality signaling and entry deterrence abstract i investigate a pricing strategy that is aimed at deterring entry by applying a two period model of a durable goods monopolist there exists an incumbent that is of two types that is high and low quality types they differ in terms of their r d capabilities and the incumbent s type is assumed to be unknown to an entrant if the entrant decided to enter the market nash bertrand price competition ensues between the incumbent and the entrant i show that not only limit pricing but also prestige pricing signals the incumbent s quality type which serves to discourage entry in the prestige pricing the high quality type sells the products at an intentionally higher price i also show that although limit pricing is more desirable than prestige pricing from a social welfare viewpoint the incumbent can still choose prestige pricing

bioenergy expansion in the eu cost effective climate change mitigation employment creation and reduced dependency on imported fuels presently the european union eu is promoting bioenergy the aim of this paper is to study the prospects for using domestic biomass resources in europe and specifically to investigate whether different policy objectives underlying the promotion of bioenergy cost effective climate change mitigation employment creation and reduced dependency on imported fuels agree on which bioenergy options that should be used we model bioenergy use from a cost effectiveness perspective with a linear regionalized energy and transport system model and perform supplementary analysis it is found that the different policy objectives do not agree on the order of priority among bioenergy options maximizing climate benefits cost effectively is in conflict with maximizing employment creation the former perspective proposes the use of lignocellulosic biomass in the stationary sector while the latter requires biofuels for transport based on traditional agricultural crops further from a security of supply perspective the appeal of a given bioenergy option depends on how oil and gas import dependencies are weighed relative to each other consequently there are tradeoffs that need to be addressed by policymakers promoting the use of bioenergy also the importance of bioenergy in relation to employment creation and fuel import dependency reduction needs to be further addressed

dictators and their viziers endogenizing the loyalty competence trade off the possibility of treason by a close associate has been a nightmare of most autocrats throughout history more competent viziers are better able to discriminate among potential plotters and this makes them more risky subordinates for the ruler to avoid this rulers especially those who are weakandvulnerable sacrificethecompetenceoftheiragents hiringmediocrebutloyalsubordinates furthermore any use of incentive schemes by a personalistic dictator is limited by the fact that all punishments are conditional on the dictator s own survival we endogenize loyalty and competence in a principal agent game between a dictator and his viziers in both static and dynamic settings the dynamic model allows us to focus on the succession problem that insecure dictators face jel d72 h00 c72 c82

the effect of endogenous timing on coordination under asymmetric information an experimental study abstract this paper investigates the role of endogenous timing of decisions on coordination under asymmetric information in the equilibrium of a global coordination game where players choose the timing of their decision a player who has sufficiently high beliefs about the state of the economy undertakes an investment without delay this decision potentially triggers an investment by the other player whose beliefs would have led to inaction otherwise endogenous timing has two distinct effects on coordination a learning effect early decisions reveal information and a complementarity effect early decisions eliminate strategic uncertainty for late movers the experiments that we conduct to test these theoretical results show that the learning effect of timing has more impact on the subjects behavior than the complementarity effect we also observe that subjects welfare improves significantly under endogenous timing

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

regional energy autarky potentials costs and consequences for an austrian region local actors at community level often thrive for energy autarky to decrease the dependence on imported energy resources we assess the potentials and trade offs between benefits and costs of increasing levels of energy autarky for a small rural region of around 21 000 inhabitants in austria we use a novel modeling approach which couples a regional energy system model with a regional land use optimization model we have collected and processed data on the spatial distribution of energy demand and potentials of biomass photovoltaics and solar thermal resources the impacts of increasing biomass production on the agricultural sector are assessed with a land use optimization model that allows deriving regional biomass supply curves an energy system model is subsequently applied to find the least cost solution for supplying the region with energy resources model results indicate that fossil fuel use for heating can be replaced at low costs by increasing forestry and agricultural biomass production however autarky in the electricity and the heating sector would significantly increase biomass production and require a full use of the potentials of photovoltaics on roof tops attaining energy autarky implies high costs to consumers and a decline in the local production of food and feed

a model of advertising format competition on the use of celebrities in ads we develop a model that endogenizes both advertising format ads with or without celebrity endorsements and the endorsement fee marketing studies suggest that celebrities enhance brand recall and perception of product value in our model ads featuring celebrities occur when the product market is large endorsements are likely for products sold nationally and when products are sufficiently similar that the persuasive character of advertising looms large in demand running shoes beauty products soft drinks for example celebrity endorsement fees are increasing in market size and in the degree of similarity of the products being advertised un modele de concurrence de formats de publicite sur l usage des celebrites dans les pubs les auteurs developpent un modele dans lequel le format de la publicite publicites avec ou sans de l appui de celebrites et les couts de cet endossement sont des variables endogenes les etudes de marketing suggerent que les celebrites rehaussent le fait qu on se rappelle de la marque et la perception de la valeur du produit dans le modele propose les pubs mettant en vedette des celebrites sont utilisees quand le marche du produit est grand quand le produit est vendu nationalement et quand les produits sont suffisamment similaires pour que la nature persuasive de la publicite joue un role important dans la demande chaussures de course produits de beaute liqueurs douces par exemple les couts de l endossement par les celebrites s accroissent avec la taille du marche et le degre de similarite des produits publicises

competition and confidentiality signaling quality in a duopoly when there is universal private information abstract we model non cooperative signaling by two firms that compete over a continuum of consumers assuming each consumer has private information about the intensity of her preferences for the firms respective products and each firm has private information about its own product s quality we characterize a symmetric separating equilibrium in which each firm s price reveals its respective product quality we show that the equilibrium prices the difference between those prices the associated outputs and profits are all increasing functions of the ex ante probability of high safety if horizontal product differentiation is sufficiently great then equilibrium prices and profits are higher under incomplete information about quality than if quality were commonly known thus while signaling imposes a distortionary loss on a monopolist using price to signal quality duopolists may benefit from the distortion as it can reduce competition finally average quality is lower since signaling quality redistributes demand towards low quality firms

on the empirical content of quantal response equilibrium the quantal response equilibrium qre notion of mckelvey and palfrey 1995 has recently attracted considerable attention due largely to its widely documented ability to rationalize observed behavior in games played by experimental subjects we show that this ability to t the data as typically measured in this literature is uninformative without ap riori distributional assumptions a qre can match any distribution of behavior by each player in any normal form game we discuss approaches that might be taken to provide valid empirical evaluation of the qre and discuss its potential value as an approximating empirical structure

cost effective policy instruments for greenhouse gas emission reduction and fossil fuel substitution through bioenergy production in austria abstract climate change mitigation and security of energy supply are important targets of austrian energy policy bioenergy production based on resources from agriculture and forestry is an important option for attaining these targets to increase the share of bioenergy in the energy supply supporting policy instruments are necessary the cost effectiveness of these instruments in attaining policy targets depends on the availability of bioenergy technologies advanced technologies such as second generation biofuels biomass gasification for power production and bioenergy with carbon capture and storage beccs will likely change the performance of policy instruments this article assesses the cost effectiveness of energy policy instruments considering new bioenergy technologies for the year 2030 with respect to greenhouse gas emission ghg reduction and fossil fuel substitution instruments that directly subsidize bioenergy are compared with instruments that aim at reducing ghg emissions a spatially explicit modeling approach is used to account for biomass supply and energy distribution costs in austria results indicate that a carbon tax performs cost effectively with respect to both policy targets if beccs is not available however the availability of beccs creates a trade off between ghg emission reduction and fossil fuel substitution biofuel blending obligations are costly in terms of attaining the policy targets

regional economic impacts of biomass based energy service use a comparison across crops and technologies for east styria austria abstract biomass action plans in many european countries seek to expand biomass heat and fuel supply mainly to be supplied by peripheral agricultural regions we develop a two plus ten region energy focused computable general equilibrium cge model that acknowledges land competition in analysing the sub state local regional economic implications of such a strategy embedded within a global context our model is based on a full cost analysis of selected biomass technologies covering a range of agricultural and forestry crops as well as thermal insulation the local regional macroeconomic effects differ significantly across technologies and are governed by factors such as net labour intensity in crop production the high land intensity of agricultural biomass products crowds out conventional agriculture and thus lowers employment and drives up land prices and the consumer price index the regional economic results show that net employment effects are positive for all forestry based biomass energy and also show for which agriculture based biomass systems this is true even when accounting for land competition when regional consumer price development governs regional wages or when the agricultural sector is in strong enough competition to the international market positive employment and welfare impacts vanish fully for agriculture based bio energy

information revelation and strategic delay in a model of investment we model investment as an n player game with a pure informational externality each player s payoff depends only on his own action and the state of nature however because a player s action reveals his private information players wait to see what other players will do equilibrium is inefficient because delay is costly and information is imperfectly revealed we characterize the unique symmetric perfect bayesian equilibrium and study the robustness of delay which turns out to be sensitive to the reaction speed and the number of players we establish the following results i when the period length is very short the game ends very quickly and there is a form of herding or informational cascade which results in a collapse of investment ii as the period length increases the possibility of herding disappears iii as the number of players increases the rate of investment and the information flow are eventually independent of the number of players adding more players simply increases the number who delay iv in the limit the time profile of investment is extreme a period of low investment followed either by an investment surge or a collapse

an exploratory game theoretic analysis of biomass electricity generation supply chain this study proposes a game theoretic approach to model and analyze the process of utilizing biomass for power generation considering three players distributor facility developer and participating farmer we characterize the nash equilibrium of the sequential game and discuss its features a special attention is devoted to the analysis of the impact of incentives and initial target on the equilibrium in which the biomass is part of electricity production

campaign advertising and voter welfare this paper investigates the role of campaign advertising and the opportunity of legal restrictions on it an electoral race is modeled as a signalling game with three classes of players many voters two candidates and one interest group the group has non verifiable insider information on the candidates quality and on the basis of this information offers a contribution to each candidate in exchange for a favorable policy position candidates spend the contributions they receive on non directly informative advertising this paper shows that 1 a separating equilibrium exists in which the group contributes to a candidate only if the insider information about that candidate is positive 2 although voters are fully rational a ban on campaign advertising can be welfare improving and 3 split contributions may arise in equilibrium and if they arise too often they are detrimental to voters

dynamic coordination with individual learning we study coordination in dynamic global games with private learning players choose whether and when to invest irreversibly in a project whose success depends on its quality and the timing of investment players gradually learn about project quality we identify conditions on temporal incentives under which in sufficiently long games players coordinate on investing whenever doing so is not dominated roughly speaking this outcome occurs whenever players payoffs are sufficiently tolerant of non simultaneous coordination we also identify conditions under which players coordinate on the risk dominant action we provide foundations for these results in terms of higher order beliefs

biogas and eu s 2020 targets evidence from a regional case study in italy abstract the provision of renewable energy by agriculture so called agroenergy is a key element of the europe 2020 strategy and has sparked public and research debates on the bio based economy hot topics involve direct and indirect land use change and the ability of agroenergy to foster or hinder food and energy security worldwide research has dealt with these and other issues associated with the sustainability of the diffusion of agroenergy generation systems but the subject is still open this paper contributes to the ongoing debate on the sustainability of agroenergy we propose an empirical model to simulate the diffusion of farm biogas installations and estimate a set of indicators covering the economic environmental and social dimensions of sustainability at the regional level model results show that the current incentive mechanism does not allow to meet eu s energy targets at the local level to do so the policy mix needs an improved design accounting for regional peculiarities across the eu model results show that agroenergy production can help farmers stabilise their income and keep viable rural areas despite some trade offs among socioeconomic and environmental indicators major drawbacks are environmental risks associated with farming intensification

on the potential trade offs between energy supply and end use technologies for residential heating in sweden where district heating accounts for a significant share of residential heating it has been argued that improvements in end use energy efficiency may be counter productive since such measures reduce the potential of energy efficient combined heat and power production in this paper we model how the potential trade offs between energy supply and end use technologies depend on climate policy and energy prices the model optimizes a combination of energy efficiency measures technologies and fuels for heat supply and district heating extensions over a 50 year period we ask under what circumstances improved end use efficiency may be cost effective in buildings connected to district heating the answer hinges on the available technologies for electricity production in a scenario with no alternatives to basic condensing electricity production high co2 prices result in very high electricity prices high profitability of combined heat and power production and little incentive to reduce heat demand in buildings with district heating in contrast in a scenario where electricity production alternatives with low co2 emissions are available the electricity price will level out at high co2 prices this gives heat prices that increase with the co2 price and make end use efficiency cost effective also in buildings with district heating

product compatibility as a signal of quality in a market with network externalities abstract in this paper i consider the compatibility decision as a signaling device of the quality of a newly introduced technology of which users are not informed provided that firms are located sufficiently far apart in hotelling s 0 1 interval i find separating equilibria where low compatibility signals high quality this possible separation is due to the fact that low compatibility is more advantageous to the high quality entrant than to the low quality entrant since it can prevent users of the established technology from enjoying network benefits from the new technology very much

the value of commitment with imperfect observability and private information the idea that commitment is valuable plays a key role in many economic models however bagwell 1995 has shown that commitment may have no value if there is even a slight noise in the observation of the leader s action thus casting doubt on the notion that commitment has strategic value here i reconsider the commitment story in a model where the leader s action is imperfectly observed and the leader has private information and i examine how it is affected by uncertainty about the leader s type and by the observation noise

crises and prices information aggregation multiplicity and volatility crises are volatile times when endogenous sources of information are closely monitored we study the role of information in crises by introducing a financial market in a coordination game with imperfect information the asset price aggregates dispersed private information acting as a public noisy signal in contrast to the case with exogenous information our main result is that uniqueness may not obtain as a perturbation from perfect information multiplicity is ensured with small noise in addition we show that a multiplicity may emerge in the financial price itself b less noise may contribute toward nonfundamental volatility even when the equilibrium is unique and c similar results obtain for a model where individuals observe one another s actions highlighting the importance of endogenous information more generally