useful fiction or miracle maker the competing epistemological foundations of rational choice theory rational choice theorists have not clearly articulated their epistemological positions and for this reason their arguments in favor of rational choice theory are inconsistent contradictory and unpersuasive to remedy this problem i describe how two of the main positions in the philosophy of science instrumentalist empiricism and scientific realism act as competing epistemological foundations for rational choice theory i illustrate how these philosophical perspectives help political scientists 1 understand what is at stake in the theoretical debates surrounding the rationality assumption self interest and methodological individualism 2 identify inconsistencies in the epistemological positions adopted by rational choice theorists and 3 assess the feasibility and desirability of a universal theory based on the rationality assumption

a spatial model of international conflict 1 he model presented here assumes that nations initiate conflict to change the international status quo across one or more issues to an outcome they prefer their preferences for different issue outcomes are represented by a classical spatial utility function international coalitions are formed both to enhance the chance of a successful challenge and to counter existing challenges disputes are modeled as periods of competition between two coalitions through the recruitment of additional members erosion of support for the opposing coalition and escalation of the crisis the two nation model is analyzed in detail and the existence of the core for the resulting game is proved the two main conclusions of the two nation model are that nations have a general incentive to exaggerate their issue positions in disputes and that the possibility of issue trades enhances the likelihood of compromise because scientific understanding arises from theories the explication of theories is essential for the development of scientific understanding to understand international conflictthat is the resolution of disputes between nations by coercion or the threat of coercion a theory that can explain such conflict is needed this paper will present a model drawn from rational choice theory specifically game theory that explains national actions in conflicts as strategic choices made in order to gain preferred resolutions of the international issues in dispute compared to existing game theory models of international conflict the model presented here provides an explicit description of how each nation s evaluation of the issues in dispute affects its desire to pursue compromise or conflict a more detailed sequence of escalation allowing for the detailed study of escalation strategies and a framework that can explain the timing and extent of third party interventions into ongoing crises

entry deterrence externalities and relative firm size most models of entry deterrence through preemptive investment consider either a monopolist or a cartel this suppresses an important question how does threat of entry affect capital choices of several noncolluding incumbents there are two opposing forces expanding capital to deter entry generates a public good to other incumbents but also increases the expanding firm s share of market output we address the trade off in a model of sequential entry with foresight where in the first stage capital choices are made sequentially and in the second stage the output interaction is cournot or competitive under competitive interaction we prove that the first entrant either admits all other potential entrants or deters all it never allows partial entry under cournot we find using simultaneous some rather surprising patterns easier entry can make the first entrant s capital larger or smaller the first entrant can be smaller than the second but is never less profitable the first entrant s profit is always reduced by increased entry threat but profits of other entrants can be increased

rationality and deterrence this essay explores the relationship between deterrence theory and two distinct notions of rationality associated with it the author argues that the concept of procedural irrationality which is the basis of many critiques of contemporary deterrence theory is not necessarily inconsistent with the instrumental definition of rationality implicit in many models of deterrence he also argues that some recent rational choice models of deterrence are nonetheless deficient in their application of the rationality postulate finally he provides an outline of a possible resolution of the paradox of deterrence

testing deterrence theory rigor makes a difference there is no consensus among scholars on how to test hypotheses about deterrence systematically the disputes are sometimes rooted in differences about theory or sources of data but they are magnified by methodological confusion especially over concepts and operational definitions that produce perverse empirical results serious theoretical errors include inadequate appreciation of the role of uncertainty in deterrence as well as selection biases that undermine empirical tests rigorous examination of our previous work in light of recent criticism discloses very robust findings on the conditions for deterrence success and failure

credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

a simple and efficient method for estimating the magnitude and precision of welfare changes in this article we propose a simple and efficient method of estimating welfare measures in an n equation system we also estimate the variance of these measures the accuracy and convergence properties of our approach are studied the algorithm converges quadratically this is a distinct improvement over the vartia algorithm which converges linearly we demonstrate the method by evaluating the welfare consequences of price changes in the provision of health care the gauss code which is very short is included

nuclear brinkmanship with two sided incomplete information a brinkmanship crisis with two sided incomplete information is modeled as a game of sequential bargaining in which each state is uncertain of its adversary s resolve the sequential crisis equilibria are characterized explicitly and used to analyze the influences of resolve misperception and the status quo on escalation and crisis stability the description of brinkmanship as a contest of resolve is found to be misleading the state with the greatest resolve may not prevail in the crisis a state may be less not more likely to prevail the greater its resolve and a states expected payoff may be less not more the greater its resolve moreover reducing misperception may destabilize a crisis surprisingly increasing the stake a potential challenger has in the status quo may not make a challenge less likely finally crises involving severe conflicts of interest are shown to be less likely than crises not entailing a severe conflict of interest

systemic politics and the origins of great power conflict why do great powers fight one another this obviously central and seemingly simple questionleadsdirectlytooneofthemostfrustrating gaps in the empirical literature on international conflict great powers are states whose interests and capabilities extend beyond their immediate neighbors more so than other states they shape and respond to thestructureoftheinternationalsystem thatstructure is typically implicated in systemic wars which evolve from the interactions of all of the major states in the system yet somehow if the conflict literature is to be believed those same states cease to be driven by systemic interests and systemic imperatives in the long stretches of time between systemic wars in typical statisticalmodelsofconflict theyarepooledwithallofthe other states in the system under the assumption that theyrespondinthesamewaytothesamestimuli which aretypicallybothlocalanddyadic 1 becausenoonecan predict with certainty whether a given crisis between great powers will be resolved without bloodshed or explodeintoasystemicwar however arguingthatonly systemic wars have systemic causes is unsustainable the main barrier to understanding the systemic origins of great power conflict is that systemic theories of international politics are notoriously vague in the

the change of tide in political cooperation a limited information model of european integration european integration follows a puzzling stop and go pattern that traditional international reations theories cannot fully explain the predominating paradigms only account for either the achievements or the setbacks of the integration process an information based explanation makes it possible to move beyond structural accounts provided by realist and functionalist scholarship such an approach yields solid micro level foundations of international bargaining and focuses on leaders use of threats in negotiations about regional cooperation situations involving governments agreeing on the necessity of further integration but disagreeing about its level create room for strategic manipulation of information asymmetries this type of uncertainty stems from the manipulator s information and control advantages concerning domestic costs the analysis of different summit meetings demonstrates the empirical relevance of such maneuvers for the dynamics of european integration

challenges of existing in a market as a small low quality producer this paper explores the strategy of a small firm entering a monopolist s market thereby creating a duopoly market the small firm avoids competing with the larger incumbent firm by producing a lower quality product at a lower price the model here establishes an equilibrium under a specific set of assumptions and examines how exogenous factors affect prices qualities and profits although the strategy might allow the firm to enter and earn a profit the market conditions may make this position much less desirable to that of the large firm for several reasons in the case explored here where tastes for the product are uniformly distributed the small firm s profit is about six percent of that of the larger firm the smaller firm is more severely threatened by the entrance of a third firm furthermore even if the smaller firm can cut costs its position is not well suited for exploiting such increases in efficiencies

spatial equilibrium with entry this paper examines spatial equilibrium in political competition when established parties choose their platforms competitively while rationally anticipating entry of a vote maximizing third party the resulting equilibrium is substantially different from the hotelling median equilibrium established parties are spatially separated and third parties will generally lose the election this provides one theoretical explanation for the stability of two party systems namely that non cooperative behavior between established parties can effectively prevent third parties from winning

strategic investment in an industry with a competitive product market this paper explores the scope for and effect of strategic behaviour by firms in an industry where the product market is competitive in the usual sense that firms are effectively price takers traditionally the literature on imperfect competition has concentrated on the product market employing the notions of the cournot equilibrium or monopolistic competition the model presented shows that even if firms are unable to obtain any such market power in the product market they can still influence the market outcome through investment behaviour which determines their actual cost structure the ability of firms to thus influence the market outcome is directly related to their market share this is a result which is not only of theoretical interest it is sometimes argued that for some industries concentration does not lead to welfare loss because the mnarket may be competitive even with only a few producers see fisher et al i983 pp 24 25 for the u s computer industry and i b m the message of this paper is that even in such competitive industries concentration still matters since firms can still behave strategically with factors such as investment and r d this paper considers a model of strategic investment in the context of a two stage dynamic equilibrium with two factors of production capital and labour in the first strategic stage firms choose their capital stocks in the second market stage the capital stocks are fixed and a competitive equilibrium occurs the two stages of the model can be seen as capturing the distinction between the long run and the short run the equilibrium rests on the reasonable assumption that the capital decisions of firms are irreversible in the market stage we are thus implicitly assuming that there is no rental market for capital in the competitive market stage the price equates supply with demand in essence the choice of the capital stock in the strategic stage determines the supply function that the firm has in the market stage thus firms are able to influence the market equilibrium to their favour through their choice of capital stock the resultant equilibrium can be interpreted as a nash equilibrium in supply functions see for example grossman i 98 i dixon i 984a in evaluating the welfare consequences of the model it is necessary to realise that the cost structure of the firm is endogenous the choice of capital

sunk costs and strategic commitment a proposed three stage equilibrium dixit s i980 paper in this journal the role of investment in entry deterrence has attracted considerable interest from economists concerned with constructing a modern theory of strategic behaviour towards entry in fact the paper has spawned quite an industry of commitment models in which the equilibrium payoffs in some final period game can be influenced by strategic commitments made by the players in an earlier period for similar models with important insights into strategic entry deterrence see eaton and lipsey i980 i98i schmalensee i98i the purpose of this note is to argue that when the instrument of stragetic commitment takes the form of sunk costs which both entrant and incumbent have to bear as it does in dixit s paper and in many other examples a three stage model rather than the two stage model presented by dixit is required although the proposed equilibrium differs from dixit s its qualitative features are the same it may or may not be profitable to deter entry and if it is the first mover may still prefer to play an accommodation strategy and allow entry to take place following dixit we restrict our attention to the asymmetric case in which one firm the incumbent makes the first move the two stage game involves the first mover sinking part of its costs in advance so that in the second stage equilibrium it will have a current cost advantage over the entrant which must incur the full cost of producing any desired output level the second period cost asymmetry ensures the incumbent a lar ger share of the post entry market which may be sufficient to deter entry altogether the problem with the two stage game lies in the nature of sunk costs sunk costs by definition are committed before the production period takes place if they were expended as a flow simultaneously with production they would not be sunk the installation of capacity is the natural example employed by dixit and well illustrates the point if installed capacity is a sunk cost which it must be for the incumbent to acquire any strategic advantage at all then the entrant s installed capacity is equally sunk and must also be committed before the production period takes place given this observation the post entry final period equilibrium should not be modelled as if the entrant were simultaneously incurring both variable and sunk costs but the incumbent only incurs variable costs this implies too great an asymmetry in favour of the incumbent the final period equilibrium should involve both firms incurring only variable

do reminders of substitutes and budget constraints influence contingent valuation estimates a test is performed of the recommendation by the noaa panel on contingent valuation that respondents be reminded about other substitute resources and their budget constraint prior to answering the willingness to pay wtp question the context for this experiment is a cvm study of the benefits from reducing fire hazards to old growth forests in oregon the test was performed using two mail surveys that were otherwise identical except for the inclusion of reminder statements prior to the wtp question the dichotomous choice logit equations were not statistically different between versions and the mean wtp results were identical

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

gulliver untied entry deterrence under unipolarity that the anarchic system generates incentives for states to balance each other s power is conventional wisdom in international relations as such the contemporary unipolar system is an anomaly observers explain its existence in several ways including the benevolence of us hegemony and the constraints international institutions impose on the exercise of us power none of them however explain what is perhaps the most puzzling outcome of the soviet collapse the decision of the united states to maintain its level of military spending to explain its choice we extend the seminal argument waltz advanced long ago to a dynamic setting using a simple model we show that the interest of the unipole in deterring a challenge to its power can induce it to continue to invest in guns rather than to shift its resources to the production of butter this strategy can enable the incumbent unipole to pre empt the balancing process that has long been thought to be central to state survival under anarchy

on entry exit and coordination with mixed strategies abstract a dynamic entry and exit game is studied where following dixit and shapiro 1986 the economics of strategic planning lexington books pp 63 79 firms play symmetric mixed strategies coordination among entrants improves and creates a tendency for the value of incumbency to increase as the number of incumbent firms increases up to the point of excess capacity this feature implies that when considering mixed strategies the relevant payoffs are not monotonic as the probability of entry increases expected profit for a given firm conditional on entry increases over some initial range it is shown that the payoffs have an interesting dynamic structure which allows the complete characterization of the equilibrium

general deterrence between enduring rivals testing three competing models general deterrence unlike immediate deterrence has rarely been analyzed in a systematic comparative manner we outline a research design for doing so by studying the circumstances under which in a set of enduring rivalries challengers are likely to initiate militarized disputes we indicate the conceptual and operational steps necessary to make and empirically compare predictions stemming from three often competing theoretical frameworks rational deterrence a general model of rational conflict initiation and a cognitive psychological model of behavior emphasizing risk orientation and misperception the results of probit analysis on a pooled time series of enduring rivalries since 1945 provide support for hypotheses from each of the different theoretical models

capabilities perception and escalation the evolution of crises depends upon interpreting intentions under uncertainty we model crises as a game of two sided incomplete information players are uncertain about their own payoffs from war because of differences between observable and actual capabilities we derive four hypotheses testing them against crises in europe between 1815 and 1970 we show a nonmonotonic relationship between ex ante observable capabilities and the likelihood of violence in a crisis as well as the ex ante likelihood of a negotiated settlement we answer five questions 1 how do differences in observable capabilities between rivals influence the likelihood of a crisis and the escalation to violence 2 how do intangible capabilities alter the effects of observable capabilities on the likelihood of conflict and violence 3 what do national leaders learn from the responses of their adversaries in crises 4 under what conditions can deterrence succeed 5 under what conditions are the strong likely to give in to the weak or vice versa in a crisis

ecosystem service value assessment for constructed wetlands a case study in hangzhou china abstract based on a comprehensive analysis of various classifications of natural resource values we summarized an ecological economic value system of constructed wetland cw ecosystems for treating eutrophic water using the cw located at the hangzhou botanical garden as an example the contingent valuation method cvm and shadow project approach spa were applied to estimate the economic values of cw system ecosystem services the cvm estimated a value of 800 000 yuan yuan chinese currency 7 6 yuan 1 usd as of august 2007 as the total economic value of the cw in a twenty year period meanwhile the spa calculated a value of 23 04 million yuan as the total economic value of the cw in a twenty year period it is determined that compared to the cvm the spa provides a more approximate value of the true monetary value of the hangzhou botanical garden cw this study could fill the gap of knowledge and provide a benchmark when evaluating constructed ecosystem services and help policy makers to promote the development of constructed wetlands in china

extended deterrence and the outbreak of war successful deterrence it is argued requires a combination of military capabilities and bargaining behavior that enhances a defender s credibility without provoking a potential attacker hypotheses on the political and military conditions under which extended immediate deterrence is likely to succeed or fail are formulated and tested by probit analysis on fifty eight historical cases the empirical results indicate that 1 the military capability of the defender to deny the potential attacker a quick and decisive victory on the battlefield enhances deterrence 2 a policy of reciprocity in diplomacy and military actions by the defender contributes strongly to deterrence success and 3 a past record of backing down under pressure or intransigence in confrontations with the potential attacker increases the likelihood of deterrence failure

oligopoly limit pricing we expand milgrom and roberts 1982 limit pricing model to allow for multiple incumbents each incumbent is informed as to the level of an industry cost parameter and selects a preentry price while a single entrant observes each incumbent s preentry price we find that incumbents are unable to coordinate deception which results in a separating equilibrium in which preentry prices are not distorted further introducing the refinement of unprejudiced beliefs we show that the no distortion equilibrium is the only refined separating equilibrium plausible pooling equilibria fail to exist or involve downward distortions in preentry prices

free riding in noncooperative entry deterrence with differentiated products 1 introductionthis paper reexamines the phenomenon of free riding in entry deterrence when established firms in an oligopoly are unable to coordinate their entry preventing activities previous authors e g bernheim 1984 gilbert and vives 1986 waldman 1987 1991 appelbaum and weber 1992 have highlighted the public good aspect of noncooperative entry prevention if costly entry deterring actions are successfully undertaken by a proper subset of the incumbents then incumbents outside of that subset cannot be excluded from the benefits of deterred entry it is in this sense that entry deterrence acquires the nature of a public good this observation has prompted previous researchers to raise the free rider question with its associated welfare implications can there occur underinvestment in entry deterrence due to the incentive for each firm to free ride on the others costly entry preventing activities the free rider problem in entry deterrence is first mentioned in the sequential entry model of bernheim 1984 however though bernheim discusses the possibility of free riding in his model the free rider problem is not the main focus of his paper in fact as pointed out by waldman 1987 p 309 footnote 2 the author s discussion of the role of the free rider problem is somewhat vague as regards whether bernheim feels the free rider problem would ever be important in a noncooperative entry deterrence setting 1gilbert and vives 1986 is the first paper in which the underinvestment issue is explicitly addressed the authors define underinvestment in entry deterrence to be associated with one or more of the following a incumbents total profits are higher preventing than allowing entry but the unique industry equilibrium allows entry b either entry prevention or entry may be an industry equilibrium but incumbents profits are higher when entry is prevented c an established monopoly or colluding incumbents prevents entry in more situations than an established noncooperating oligopoly p 77 label a b and c as underinvestment of type 1 2 and 3 respectively gilbert and vives g v go on to show that in none of these respects is there underinvestment in their quantity setting homogeneous product model on the contrary they demonstrate a strong possibility of overinvestment g v consider a situation where symmetric noncooperative incumbents with constant marginal costs of production make credible commitments to outputs in the preentry stage 2 the entrant incurs a fixed entry cost if it enters the industry and makes its entry and output decision after observing the incumbents output choices consequently there exists a limit output which if jointly produced by the oligopoly deters entry 3 g v find that entry is prevented when limit outputs are small while entry is allowed for larger limit outputs for limit outputs in an intermediate range both allowing entry and preventing entry are equilibria they prove that in this intermediate range where both entry accommodating and entry preventing equilibria coexist the unique entry equilibrium pareto dominates every deterrence equilibrium in other words compared with any deterrence equilibrium there is typically a continuum of such equilibria the accommodation equilibrium yields strictly higher profits to every incumbent hence if the industry settles on an entry preventing equilibrium the implication is that overinvestment exists because by jointly reducing incumbents outputs and allowing entry every incumbent can be made better off this paper introduces product differentiation into the g v model and shows that sufficiently large amounts of product differentiation can generate underinvestment in entry prevention the intuition is straightforward consider an incumbent s profit in any entry deterring equilibrium where exactly the limit output is produced by the oligopoly

when misperception matters this essay is an analysis of the implications of misperception the inaccurate assessment by one actor of the other actor s preferences in international relations the author finds that misperception cannot affect the choice of an actor with a dominant strategy although it can affect that actor s expectations as long as both actors are self interested and seek to maximize their own payoffs misperception creates conflict only in a narrowly circumscribed range of situations and even then the misperceived actor has no incentive to mask its true preferences an actor who deceives does so in order to facilitate coordination through the other s misperception of its preferences and thus to avoid conflict not to create it three possible outcomes can occur when both actors misperceive and in only one of the three does misperception cause conflict that would otherwise be avoidable in a formal analysis of the limited set of situations that characterize international crises misperception is found neither to create conflict nor to lead to the escalation of crisis into war

entry deterrence and the free rider problem the public good aspect of entry prevention is examined in an industry characterized by an established oligopoly facing a potential entrant although incumbent firms act noncooperatively underinvestment in entry deterrence does not occur and in fact incumbents may find themselves in a pareto dominated arrangement in terms of profits by preventing entry

simultaneous entry and welfare abstract i examine the welfare properties of free entry under conditions of simultaneous entry specifically i consider the second best problem of influencing the number of entrants while taking as given firm behavior upon entry i consider two alternative models of simultaneous entry grab the dollar entry and war of attrition entry i show that if entry costs are low then the results from previous models of sequential entry are fairly robust to the possibility of simultaneous entry if however entry costs are high then the welfare effects of free entry depend delicately on the nature of the entry game being played

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

what makes deterrence work cases from 1900 to 1980 the use of military force to achieve foreign policy objectives is an enduring feature of international politics force or the threat of force may be used either to change the status quo or to maintain it threatening the use of force to maintain the status quo often takes the form of deterrence defined by patrick morgan as the threat to use force in response as a way of preventing the first use of force by someone else 1 deterrence sometimes succeeds and sometimes fails failures are attested to by numerous international wars of history in the nuclear age a failure could cost us our lives the conditions of successful deterrence thus require thorough logical and empirical analysis

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

the war trap revisited a revised expected utility model the expected utility framework developed in the war trap is revised to correct several deficiencies risk taking orientations are now treated as an integral part of the model by introducing concavity or convexity into the utility functions the zero sum properties of the theory are largely eliminated and the tendency toward interpersonal comparisons of utility is removed several earlier results are replicated with the new model and with annual capabilities data new propositions are deduced that identify important limitations on conflict initiation and relationships resulting from differences in perceptions are tested support is found for the contention that the revised version of the theory of which the original model is a special case is a powerful tool for integrating many extant hypotheses about conflict and for explaining a substantial portion of the tendency for some threats to escalate to violence or warfare and for others to be resolved peacefully

the contingent valuation debate why economists should care t he contingent valuation method involves the use of sample surveys questionnaires to elicit the willingness of respondents to pay for generally hypothetical projects or programs the name of the method refers to the fact that the values revealed by respondents are contingent upon the constructed or simulated market presented in the survey a spirited and occasionally mean spirited battle over such methods is currently being waged involving competing factions within the federal government economists and lawyers representing business and environmental groups and interested academics as well at issue is a seemingly quite specific question should environmental regulations currently under development at both the department of the interior and the department of commerce sanction the use of the contingent valuation method in estimating the damage done by spills of oil chemicals or other substances covered by federal law more generally the debate raises broad questions about what economists have to say about the values that individuals place on public or private goods the two papers that follow this one make cases for and against the use of the contingent valuation method my aim here is to provide an overview of the technique and the debate surrounding it i also want to suggest why this debate should matter to economists both professionally and in their roles as citizens and consumers

the escalation of great power militarized disputes testing rational deterrence theory and structural realism realism we test the relative explanatory power of these two theoretical approaches on the escalation of deterrence encounters among great powers from 1816 to 1984 we derive a set of hypotheses from each model operationalize them for systematic empirical analysis and test the hypotheses on 97 cases of great power deterrence encounters by means of probit analysis the results are that the hypotheses derived from deterrence theory receive considerable support whereas none of the hypotheses derived from structural realism are supported in contemporary research on the causes of international conflict the realist paradigm has been the dominant theoretical approach within this broad framework however scholars have developed at least two prominent alternative models of the conditions under which conflict is likely to arise the first approach structural realism 1 focuses on the attributes of the international system while the second deterrence theory is largely dyadic and emphasizes the resolve and relative military capabilities of adversarial states while both theoretical approaches attempt to identify the conditions under which international crises and wars are likely to arise their

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

rational deterrence theory and comparative case studies several recent books have argued that comparative case studies of crises demonstrate the failure of rational deterrence theory they have offered certain empirical generalizations as substitutes this paper shows that such contentions are unwarranted first the empirical generalizations are impressive as historical insights but they do not meet the standards for theory set out by the most sophisticated case study analysts themselves second the tests of rational deterrence used in the case studies violate standard principles of inference and the ensuing procedures are so biased as to be useless rational deterrence then is a more successful theory than portrayed in this literature and it remains the only intellectually powerful alternative available case studies are essential to theory building more efficiently than any other methods they find suitable variables suggest middle range generalizations for theory to explain and provide the prior knowledge that statistical tests require their loose constraints on admissible propositions and suitable evidence are appropriate and even necessary for these tasks these same characteristics however inevitably undermine all attempts to construe case study generalizations as bodies of theory or tests of hypotheses

deterrence the elusive dependent variable the testing of theory in international relations requires clearly articulated assumptions the specification of scope conditions rigorously formulated propositions appropriate tests and a valid and reliable data set against which to test the propositions this last requirement has generally been the most neglected dimension of research in this article we examine two prominent studies of immediate extended deterrence by paul huth and bruce russett that do not deal adequately with the problems intrinsic to constructing a valid data set for quantitative analysis t the problems are particularly acute in the testing of theories of deterrence because of the difficulties inherent in identifying deterrence successes which leave few if any behavioral traces and of inferring the intentions of would be challengers our analysis explores these problems and suggests ways of testing theories of deterrence that can reduce the threats to valid inference 2 we would like to thank the canadian institute for international peace and security and

weak entrants are welcome abstract this paper investigates the decision problem of an incumbent firm confronted by both a weak and strong entrant in a differentiated market suppose that the incumbent can deter entry of the weak firm but cannot deter entry of the strong firm by itself then the incumbent may allow entry of the weak firm and use it to alter the strong firm s entry decision the present paper formalizes this idea and it sheds new light on the fact that domestic firms are sometimes able to block strong foreign firms after trade liberalization the idea also explains why a dominant firm lets fringe firms be in the market

nuclear superiority and the balance of resolve explaining nuclear crisis outcomes scholars have long debated whether nuclear superiority or the balance of resolve shapes the probability of victory in nuclear crises but they have not clearly articulated a mechanism linking superiority to victory nor have they systematically analyzed the entire universe of empirical cases beginning from a nuclear brinkmanship theory framework i develop a new theory of nuclear crisis outcomes which links nuclear superiority to victory in nuclear crises precisely through its effect on the balance of resolve using a new data set on fifty two nuclear crisis dyads i show that states that enjoy nuclear superiority over their opponents are more likely to win nuclear crises i also find some support for the idea that political stakes shape crisis outcomes these findings hold even after controlling for conventional military capabilities and for selection into nuclear crises this article presents a new theoretical explanation and the first comprehensive empirical examination of nuclear crisis outcomes

vertical product differentiation with entry abstract this paper examines the non cooperative behaviour of established firms that compete in product quality and prices while foreseeing the effects of their rivalry on the decisions made by the later entrants we prove an existence and uniqueness of the equilibrium and show that the dominant firms engage in maximal product differentiation i e select the highest and lowest technologically feasible qualities later entrant however always selects an intermediate quality moreover we show that the equilibrium configuration is identical to that generated by perfect foresight equilibrium in a model of sequential entry furthermore the profits earned by each firm are ranked in the same order as the qualities implifying that the later entrant despite being the last mover ends up with higher profits and larger market share than one of the incumbents

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

crime and punishment the role of norms in crisis bargaining in this work i test the proposition that normative standards of behavior can influence state actions in security related conflicts specifically i examine the construction of norms in the settlements of security related disputes and the effects these settlements have on subsequent militarized interactions i argue that dispute settlements alter subsequent crisis bargaining in two important ways first they act as normative referents that alter the interpretation of subsequent crisis bargaining behavior both by identifying a solution to the dispute which alleviates fears of demands for future concessions and by defining a set of acts which both sides consider illegitimate second in combination with the response to their violation dispute settlements inflict reputational costs on states that violate them i test these arguments against a realist theory of crisis bargaining through an analysis of 122 reinitiated international crises between 1929 and 1979 i find strong support for the hypothesis that states can and do construct normative standards that guide their behavior in international crises whereas realist theory receives only mixed support

strategic deterrence of sequential entry into an industry industrial entry deterrence is typically studied in a setting where an established firm or firms confront and attempt to deter a single potential competitor during the evolution of most industries however a sequence of firms enters or attempts to enter at distinct points in time consideration of issues arising from sequential entry fundamentally alters the qualitative nature of the deterrence decision undertaken by incumbent firms within a sequential setting counterintuitive behavior may be observed specifically numerous government policies designed to decrease industrial concentration penalties for anticompetitive practices subsidization of entry consent decrees restructuring industries may have the opposite effect

homo diplomaticus mixed method evidence of variation in strategic rationality psychology is traditionally used in political science to explain deviations from rationality lost in the debate between rationalists and their critics however is a sense of whether the kinds of strategic self interested behavior predicted by these models has psychological microfoundations what would homo economicus look like in the real world we argue that strategic rationality varies across individuals and is characterized by a pro self social value orientation and a high level of epistemic motivation testing our argument in the context of international relations we employ a laboratory bargaining game and integrate it with archival research on german foreign policy making in the 1920s we find in both contexts that even among those interested in maximizing only their own egoistic gains those with greater epistemic motivation are better able to adapt to the strategic situation particularly the distribution of power our results build a bridge between two approaches often considered to be antithetical to one another

preemptive investment toehold entry and the mimicking principle this article explores the ability offirms to successfully enter against an initial monopolist by pursuing toehold entry sinking entry costs early and planning to produce only later we endow the incumbent with strongfirst mover advantages for example capital is the only input and is completely sunk and in each period the incumbent invests before entrants nevertheless the incumbent s profit can easily be negative if it tries to deter all entry when the market is growing the incumbent may need prohibitive capital in place early on because once toehold entry has occurred the incumbent s planned capital expansion might no longer be rational surprisingly even if market conditions remain stationary the incumbent may still allow some entry in the model some firms are always deterred showing that several firms can deter others more effectively than can a singlefirm the difference arises because onefirm cannot commit to mimicking the aggregate investment path that several independent firms would choose this mimicking principle offers a general perspective for understanding when a monopolist finds deterrence optimal

a unified theory and test of extended immediate deterrence we present a unified theory and test of extended immediate deterrence unified in the sense that we employ our theoretical deterrence model as our statistical model in the empirical analysis the theoretical model is a straightforward formalization of the deterrence logic in huth 1988 and huth and russett 1984 coupled with private information concerning utilities our statistical analysis suggests that the attacker and defender s decisions are influenced by the balance of forces nuclear weapons defender protege military alliances arms transfers and trade as well as the regime types of those involved many of these findings contradict previous research by huth 1988 and huth and russett 1988 we find that many of the variables involved in the deterrence calculus are nonmonotonically linked to the probability of deterrence success or war we illustrate the results with case studies of the soviet japanese dispute over manchukuo 1937 1938 and the berlin blockade 1948

capabilities uncertainty and resolve a limited information model of crisis bargaining this paper presents and solves a crisis bargaining game under limited information the sides alternate offers from three possible offers with war and its costs starting if the target s counteroffer is rejected the equilibrium of the model falls into four different cases these four cases are analyzed to determine how the sides communicate through their offers and how the costs of war initial beliefs misperceptions and distribution of capabilities drive the probabilities of a crisis and war the model demonstrates a joint selection bias misspecification problem in empirical studies of crises arising from the unobservable nature of beliefs several empirical studies of crisis bargaining are discussed in the light of this methodological problem new patterns of evidence are found that support the presence of the selection problem and their conclusions are reexamined

the pro competitive effect of higher entry costs abstract in an oligopolistic market with vertical product differentiation incumbent firms use sophisticated entry deterring and accommodating strategies when entry costs are low firms accommodate entry for higher entry costs incumbent firms deter entry by producing close substitutes the current paper shows that higher entry costs can lead to more intense competition meaning lower price cost margins and lower industry profits it also shows that total surplus increases and all consumers are strictly better off

contrasting rational and psychological analyses of political choice we contrast the rational theory of choice in the form of expected utility theory with descriptive psychological analysis in the form of prospect theory using problems involving the choice between political candidates and public referendum issues the results showed that the assumptions underlying the classical theory of risky choice are systematically violated in the manner predicted by prospect theory in particular our respondents exhibited risk aversion in the domain of gains risk seeking in the domain of losses and a greater sensitivity to losses than to gains this is consistent with the advantage of the incumbent under normal conditions and the potential advantage of the challenger in bad times the results further show how a shift in the reference point could lead to reversals of preferences in the evaluation of political and economic options contrary to the assumption of invariance finally we contrast the normative and descriptive analyses of uncertainty in choice and address the rationality of voting

deterrence and foreign policy the article by christopher achen and duncan snidal in this issue however provocative some of its observations has the merit of raising an important question how should we think about the relationship between deductive theories of deterrence on the one hand and on the other research on deterrence that is at the same time empirical and oriented toward theory while forcefully defending the deductive form of theory achen and snidal also clearly dissociate themselves from the extreme position that it is a self contained enterprise that need not take empirical research seriously rather they recognize that empirical case studies are capable of contributing and indeed have to some extent already contributed to the development of theory perhaps even to the kind of deductive theory they favor

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

contingent valuation and the budget constraint abstract one of the most vehemently debated techniques for the valuation of environmental goods is the contingent valuation method critics of this method question its validity and reliability in many respects however at the moment the contingent valuation method is the only technique at hand for the assessment of non use values of environmental goods therefore it seems worthwhile to have a closer look at some of the criticism raised in this debate this paper deals with the so called budget constraint bias which is suspected of distorting the results of contingent valuation studies according to the critics of the contingent valuation method the stated willingness to pay for an environmental good as assessed by contingent valuation studies is systematically biased upwards because participants of such surveys do not properly observe their personal budget constraints it is maintained that respondents when asked about their willingness to pay for an environmental good do not regard the amount stated by them as reducing their budget left for the purchase of private goods in this paper it is shown that from a theoretical point of view respondents intuitively do the right thing when ignoring the seeming relationship between their willingness to pay for an environmental good and their capacity to buy private goods it is elucidated that contingent valuation surveys should focus on the assessment of the shadow price of an environmental good rather than of the respective willingness to pay therefore it seems that the budget constraint bias is meaningless with respect to the validity of the contingent valuation method

crisis bargaining escalation and mad although incomplete information is recognized to be an essential feature of crises game theoretic formulations have not generally modeled this explicitly this paper models a mutually assured destruction mad crisis as a game of sequential bargaining with incomplete information sufficiently simple that its equibria may be found these provide better game theoretic foundations for the notions of resolve and critical risk and their role in crises and also make it possible to compare the bargaining dynamics of this model with those of descriptively richer but incompletely specified models revealing several inconsistencies several analyses of mad conclude that the state with the greatest resolve in this contest of resolve will prevail many models based on critical risks suggest that a state is less likely to escalate the greater its adversary s resolve in our model however the state with the weakest resolve sometimes prevails and some states prove more likely to escalate if their adversaries resolve is greater

intertemporal market division a case of alternating monopoly abstract in this paper we report on an equilibrium with market dominance that exists in a simple two firm model that features neither entry barriers nor sophisticated punishment strategies this equilibrium induces an intertemporal market division in which the two firms alternate as monopolists despite the fact that the model also sustains a cournot duopoly even when initially both firms are active in the market the alternating monopoly reveals itself rather quickly moreover it pareto dominates the cournot equilibrium as it is close to the cartel outcome several examples of what well may be such alternating monopolies are presented

the abolition of slavery and the end of international war slavery and war have both historically been considered inevitable consequences of human nature yet slavery has been abolished and moral progress may have contributed to slavery s disappearance both realists and marxists are skeptical about the impact of ethical constraints on political decisions while idealists as well as at least some regime analysts emphasize the role of those constraints however elements of all of these approaches support the proposition that moral progress may bring an end to international war some historical trends do not support the idea that international war is on the verge of disappearance but there has not been a war between major powers since 1945 in addition norms against colonialism are strong no war has occurred between democratic states nor does a war appear likely among the rather sizable number of industrialized democratic states in the international system today explanations of these pockets of peace based on caution induced by nuclear weapons or on economic interdependence for example are certainly not beyond question therefore it may be that norms inhibiting the initiation of international war have already made obsolete not only wars between the richest and most powerful states in the world but also some forms of depradation by the strong against the relatively weak states

crisis stability in the nuclear age in the logic of crisis stability first strike advantages may still be destabilizing although even a successful first strike cannot protect a state from a terribly costly retaliatory second strike if there is an advantage to striking first and if war seems sufficiently likely launching a preemptive first strike may seem to be the least of evils i reconsider the logic of crisis stability by studying games that are completely stable although there are first strike advantages four general conditions ensure stability identifying these conditions refines our understanding of crisis stability by also identifying the potential sources of instability and this more refined understanding shows that the logic of crisis stability focuses attention too narrowly on first strike advantages stability results from a more subtle interaction of several factors of which a first strike advantage is only one

on hierarchical spatial competition in this paper we consider a hierarchical model of spatial electoral competition with two dominant players incumbents and one entrant the incumbents engage in a non cooperative game against each other and act as stackelberg leaders with respect to a vote maximizing entrant we prove that the equilibrium of this game called a hierarchical equilibrium exists and is unique for an arbitrary single peaked distribution of voters ideal points moreover we fully characterize the set of equilibrium strategies and show its equivalence to the set of strategies generated by a perfect foresight equilibrium most of the recently developed models of entry in oligopolistic markets and the theory of political competition deal with the case of dominant firms or parties which face a threat of potential entry these models possess a number of features on which they may be compared and contrasted the most important of these features are the ways in which the existing parties or firms compete against each other for votes or profits and types of expectations the incumbents have about the responses of potential entrants to changes in their decisions in most of the cases an electoral or oligopolistic competition is represented by some type of a non cooperative game played by parties or firms in this paper we also consider a non cooperative model of electoral race where the established parties incumbents compete against each other by offering positions ideologies to the population of voters given the profile of voters preferences over the space of ideologies or issue space each of the established parties attempts to maximize its vote share in making their choices the incumbents however anticipate that a new party an entrant will join the electoral race consistent with the other parties objectives the entrant is assumed to maximize its share of voters while taking the incumbents choices as given the resulting non cooperative game possesses therefore a structural hierarchy the established parties behave as nash players with respect to each other whereas acting as stackelberg leaders with respect to the entrant and correctly anticipating its vote maximizing response to their choices in the issue space the main purpose of this paper is to study the properties of the game we described and in particular to characterize its equilibrium which we will call hierarchical equilibrium naturally some assumptions are needed in order to guarantee the existence of the equilibrium we assume that there are two established parties the issue space i is the uni dimensional interval all voters have symmetric single peaked peaked preferences over i and the distribution of the voters ideal points is represented by a quasi concave continuous density function under these rather mild assumptions we are able to prove the existence and uniqueness of the hierarchical equilibrium and to completely

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

sustainable collusion in oligopoly with free entry we investigate the stability of collusion in a market where firms cannot prevent entry in a symmetric homogeneous oligopoly there are collusive long run equilibria under which the colluders obtain positive economic rents while they do not prevent entry of firms up to a maximum equal to the largest number of firms sustainable at a single shot equilibrium the collusion is not generous to new entrants their profits are a little better than those associated with the discounted single shot equilibrium eventually entrants obtain profits equal to the incumbent firms we extend the results to asymmetric differentiated oligopolies

goliath s curse coercive threats and asymmetric power states typically issue compellent threats against considerably weaker adversaries yet their threats often fail why expanding on a standard model of inter national crisis bargaining i argue that a theory of reputation building can help shed light on this puzzle the model casts reputation as a strategic problem showing that challengers issuing compellent threats have incentives to anticipate the reputation costs that target states incur when appeasing aggressors if challengers can recognize these costs and offset them with side payments or smaller demands then even reputation conscious targets will acquiesce i argue however that military strength contributes to information problems that make challengers more likely to underesti mate their targets reputation costs and insufficiently compensate them in this way military power can undermine the effectiveness of compellent threats the logic is illustrated by the 1939 russo finnish crisis and the argument s implications for the study of coercive diplomacy are explored

assessing competing defense postures the strategic implications of flexible response a two stage asymmetric escalation game is developed to explore the connection between stage credibility and deterrence stability there are two players in the model challenger and defender challenger may initiate or not if challenger initiates defender may do nothing respond in kind or escalate challenger may then escalate or counterescalate and so on each player is uncertain about the other s intentions at the final stage of the game escalation represents a choice that both players believe is qualitatively different from other available responses thus the model applies to any situation in which defender may respond by crossing a threshold thereby inducing a psychologically distinct level of conflict the perfect bayesian equilibria are identified and interpreted and inferences are drawn about the viability of limited war options and various competing flexible response deployment policies in general the model reveals that substrategic deployments add little to overall deterrence stability under certain relatively rare conditions a policy called no first use in the super power context offers defender advantages that might conceivably warrant the deployment stance associated with it but a war fighting deployment never benefits defender within the confines of the model therefore limited or substrategic wars are possible but unlikely

rational deterrence theory i think therefore i deter deterrence theories purport to supply the auxiliary assumptions rational choice theories need to predict rational strategic behavior they generally assume that would be initiators are i instrumentally rational 2 risk prone gain maximizers 3 free of domestic constraints and 4 able to identify themselves correctly as defenders or challengers these assumptions are contradicted by empirical studies that indicate that risk prone gain maximizing initiators are relatively uncommon that leaders at times calculate as deterrence theories expect but behave contrary to their predictions and that the calculus of initiators generally depends on factors other than those identified by deterrence theories deductive theories of deterrence are also inadequate because they do not define their scope conditions nor can they accommodate deviation by initiators from processes of rational calculation rational deterrence theories are poorly specified theories about nonexistent decision makers operating in nonexistent environments