further results on asset pricing with incomplete information abstract this paper extends the analysis of asset pricing when information is incomplete by relaxing some of the restrictive assumptions of the gaussian model studied earlier in the literature for the information structure considered the posterior beliefs of the investor the conditional distribution of the current state given the past observations are characterized by two sets of sufficient statistics implementable in the form of a filter i the vector of conditional means and ii a set of sufficient statistics for the conditional variance covariance matrix a separation theorem is demonstrated and used to produce a closed form solution for the interest rate process when the investor s utility function is logarithmic in this context we examine the informational efficiency properties of the interest rate and analyze the stochastic shifts in the volatility of the interest rate process

two stage equilibrium and product choice with elastic demand abstract this paper examines a two stage model of product choice with elastic demand duopolists choose locations and then prices consumers demand is linear in price transportation cost is quadratic and is a lump sum for each pair of locations there is a price equilibrium in the second stage the first stage equilibrium locations are unique symmetric and depend upon the ratio of the reservation price and the transportation cost parameter when this ratio exceeds a certain critical value the locations are at the extreme end points of the market as the ratio decreases the locations gradually move towards the center

endogenous market segmentation for lemons information asymmetry between sellers and buyers often prevents socially desirable trade this article presents a new mechanism that mitigates the inefficiencies caused by information asymmetry i consider decentralized markets under adverse selection and show that such markets can be endogenously segmented in a way that improves social welfare endogenous segmentation is driven by low quality sellers incentive to attract more buyers by separating from high quality sellers the mechanism helps us understand the roles of several real world institutions such as multiple marketplaces costless advertisements and nonbinding list prices

delegated portfolio management abstract a problem of screening agents with privately known forecasting abilities and reservation utilities and then eliciting truthful information from these agents once they are employed is considered for the case of risk averse agents and large principals an approximately optimal solution is constructively characterized under the assumption that payoffs are normally distributed a significant extension of the definnetti savage probability elicitation result is developed under this extension knowledge of agent preferences is not required when the underlying conditional distributions are symmetric and this fact is exploited to solve the screening problem in a mean variance formulation

consensus consumer and intertemporal asset pricing with heterogeneous beliefs le fichier attache est egalement edite dans les cahier de la chaire les particuliers face aux risques de l institut de finance de dauphine cahier n 7 mars 2007

endogenous sequential entry in a spatial model in this paper we simulate a sequential entry of firms in a differentiated industry a la hotelling firms select a product location once for all they are aware of the unique price equilibrium that will take place after entry has occurred and take into account the behaviour of subsequent entrants it is found that early entrants will systematically locate around the centre but in such a way as not to induce later competitors to locate in between them location choices are also investigated as an instrument for entry deterrence which is feasible because of a fixed cost we identify several ranges of fixed cost for which entry is innocently deterred corresponding to a natural monopoly duopoly triopoly entry deterrence is then typically used to stretch the range of fixed cost for which a given number of firms can be sustained deterrence strategies are consistently such that firms locate at more regular intervals

logarithmic preferences myopic decisions and incomplete information this paper examines a dynamic production economy with incomplete information and shows that the set of myopic preferenees those that induee myopic decisions depends on the representation of the information flow for example logarithmic preferenees are nonmyopic when some of the economic state variables are unobservable the analysis offers a broader definition of myopic behavior termed generalized myopia which is independent of the representation of the information flow allowing for any smooth concave utility function logarithmic preferenees endogenously emerge as necessary for generalized myopia in incomplete information economies and when combined with restrictions on the information structure they become sufficient i introduction this paper investigates myopic decisions and myopic preferenees in an in complete information production economy with continuous consumption and in vestment the paper interprets myopic decisions as those that do not use informa tion regarding future investment opportunities and identifies specific conditions for myopia within the model although previous research in financial economics has associated logarithmic preferenees with myopic behavior this analysis demonstrates that logarithmic preferenees necessarily induee myopic behavior only when all the economic state variables are observable based on this analysis the paper proposes a broader definition of myopia termed generalized myopia that is independent of the information flow representation the paper also provides nec essary and sufficient conditions for the existence of generalized myopia within both complete and incomplete information economies while the analysis allows for any smooth concave utility function logarithmic preferenees endogenously arise as necessary for generalized myopia in incomplete information economies and when combined with restrictions on the information structure they become sufficient

hotelling s competition with relative performance evaluation abstract this paper studies the impact of relative performance evaluation rpe on the equilibrium locations in a hotelling model with quadratic transportation cost it is shown that equilibrium location varies from maximum differentiation to minimum differentiation depending upon the relative strength of the rpe effect over the competition effect moreover social welfare is greater with than without rpe

price matching policy and the principle of minimum differentiation this paper shows that if duopolists are allowed to choose their product locations a price matching policy and their prices sequentially and independently both tacit collusion and minimum differentiation occur copyright 1995 by blackwell publishing ltd

dynamic portfolio choice with parameter uncertainty and the economic value of analysts recommendations we derive a closed form solution for the optimal portfolio of a non myopic utility maximizer who has incomplete information about the alphas or abnormal returns of risky securities we show that the hedging component induced by learning about the expected return can be a substantial part of the demand using our methodology we perform an ex ante empirical exercise which shows that the utility gains resulting from optimal allocation are substantial in general especially for long horizons and an ex post empirical exercise which shows that analysts recommendations are not very useful

nonminimal product differentiation as a bargaining outcome abstract it is well known that in a duopoly model of product choice with quadratic transportation cost the firms locate at the extreme endpoints of the market jehiel 1992 int j ind organ 10 633 641 has examined this model in an infinite horizon setting where in the initial period the firms choose location and in subsequent periods charge the nash bargaining solution prices then in the unique equilibrium both firms locate at the center of the market this paper examines the case when the firms instead charge the prices determined by either the egalitarian bargaining solution or the kalai smorodinski bargaining solution it is shown that central agglomeration is an equilibrium furthermore there is a continuum of symmetric equilibria in addition where the firms locate apart from each other so the products are not necessarily minimally differentiated thus different bargaining solutions provide quite different outcomes

linking price dispersion to product differentiation incorporating aspects of customer involvement the fact that product differentiation can cause price dispersion price differences between alternative brands of what are seemingly identical products is not surprising our contribution is to establish not whether but how it does so we explore the mechanisms involved using a variant of hotelling s market line model we make no explicit assumptions about the functional form of the consumer s utility function so that we derive a general relationship between price dispersion and product differentiation we then survey 16 product groups to identify the functional form of the consumer s utility function that allows our result to best fit real world circumstances we show that it is not product differentiation per se that causes price dispersion but rather the presence of a differential advantage of one product over another more importantly we show that the impact of a differential advantage in causing price dispersion is amplified or attenuated by an aspect of customer involvement in a purchase th

continuous time methods in finance a review and an assessment i survey and assess the development of continuous time methods in finance during the last 30 years the subperiod 1969 to 1980 saw a dizzying pace of development with seminal ideas in derivatives securities pricing term structure theory asset pricing and optimal consumption and portfolio choices during the period 1981 to 1999 the theory has been extended and modified to better explain empirical regularities in various subfields of finance this latter subperiod has seen significant progress in econometric theory computational and estimation methods to test and implement continuous time models capital market frictions and bargaining issues are being increasingly incorporated in continuous time theory the roots of modern continuous time methods in finance can be traced back to the seminal contributions of merton 1969 1971 1973b in the late 1960s and early 1970s merton 1969 pioneered the use of continuous time modeling in financial economics by formulating the intertemporal consumption and portfolio choice problem of an investor in a stochastic dynamic programming setting merton 1973b also showed how such a framework can be used to develop equilibrium asset pricing implications thereby significantly extending the asset pricing theory to richer dynamic settings and expanding the scope of applications of continuous time methods to study problems in financial economics 1 within a span of about 30 years from the publication of merton s inf luential papers continuous time methods have become an integral part of financial economics indeed in certain core areas in finance such as e g asset pricing derivatives valuation term structure theory and portfolio selection continuoustime methods have proved to be the most attractive way to conduct research and gain economic intuition the continuous time approach in these areas has produced models with a rich variety of testable implications the econometric theory for testing continuous time models has made rapid strides in the last decade and has thus kept pace with the impressive progress on the theoretical front one hopes that the actual empirical investigations and estimation using the new procedures will follow suit soon

spatial competition and price leadership in the stackelberg price leader price follower model each firm is typically better off as a follower than as a leader in this paper we show that introducing the spatial dimension provides a means of endogenising the role of price leadership furthermore the leader follower framework yields existence of a price and location equilibrium in the hotelling spatial model of competition where none exists under the original specification we first analyse the original hotelling model by determining reaction functions for firms this approach allows the model to be fully characterised and affords an intuitive explanation of the non existence of a price equilibrium for certain locations the reaction functions are then used to determine the solution when one firm adopts the stackelberg leadership role contrary to the existing predictions of the simple spatial duopoly model it is found that the outcome is asymmetric in terms of stackelberg equilibrium locations prices and profits with the first firm in the market enjoying higher profits than the subsequent entrant the equilibrium involves one firm locating at the mid point of the market this outcome is also appealing as it corresponds to the entry deterring and monopoly solutions

competition of newspapers and the location of political parties in this paper we suggest a model for an analysis of how newspapers and political parties determine their ideological orientation and how both decisions depend on each other quite naturally dissemination of information plays an important role the model is set up as a two stage game because elements of horizontal as well as vertical product differentiation are present in this model location patterns in ideology space exhibit in general neither maximal nor minimal differentiation although we keep quite close to the downs model with information as the most important distinguishing feature furthermore the model shows by way of example that economic theory can be a useful tool to investigate issues which are central to communication science

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

equilibrium interest rates and multiperiod bonds in a partially observable economy this paper analyzes the market for financial assets in a production and exchange economy with several realized outputs and a single unobservable source of nondiversifiable risk the paper demonstrates that for a large class of diffusion outputs and preferences optimizing consumers first estimate the realizations of the unobservable factor and then use these estimates to determine portfolio and consumption rules moreover the explicit consideration of this unobservable productivity factor affects equilibrium demands and prices the equilibrium spot rate of interest emerges as the best estimate of the unobservable factor and multiperiod default free bonds arise as the optimal hedge for the unobservable changes of the stochastic investment opportunity set this paper analyzes the market for financial assets in a production and exchange economy with several realized outputs and a single unobservable source of nondiversifiable risk the paper poses and answers three questions 1 how do consumers determine equilibrium demands and prices when their investment opportunities are unobservable 2 in equilibrium what financial assets provide an optimal hedge for the

a theory of quality related differences in retail margins why there is a premium on premium gasoline this paper develops a theory of vertical and horizontal product differentiation to explain observed price cost margin differentials for goods that differ in quality the difference in price cost margins between the high and low quality goods is shown to depend positively on consumers average valuation for incremental increases in quality and positively on the distance to each competitor s closest rival these predictions are largely supported using an extensive station level data set of premium and regular unleaded gasoline prices from the los angeles basin area from 1992 1995

positioning and pricing in a variety seeking market we study competitive positioning and pricing strategies in markets where consumers seek variety variety seeking behavior is modeled as a decrease in the willingness to pay for the product purchased on the previous purchase occasion using a three stage hotelling type model we show that the presence of variety seeking consumers reduces product differentiation offered in equilibrium thereby explaining some otherwise counterintuitive findings in empirical research we find that firms charge higher prices in period 1 and lower prices in period 2 the lower price in period 2 represents the price incentive that firms need to offer to prevent the variety seeking consumers from switching furthermore we find that the observed switching in a market may not fully capture the true magnitude of the underlying variety seeking tendencies among consumers finally we show that the presence of variety seeking consumers leads to lower firm profits and a higher consumer surplus surplus increases for variety seeking consumers as well as regular consumers therefore the presence of variety seeking consumers benefits everyone in the market

intertemporal product choice and its effects on collusive firm behavior this study analyzes the collusive behavior of firms in markets characterized by horizontal product differentiation the special features are that product choice is endogenized and that firms may redesign their products intertemporally at a fixed cost the main objective is to examine the relationships between the extent of product differentiation the product redesigning cost and the degree of collusion supportable the findings indicate that flexible product design makes collusion more difficult to sustain since in the event collusion breaks down firms have an incentive to mitigate the severity of punishment by redesigning their products and thus reducing price competition copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

equilibrium in a simple price location model abstract in a spatial model with endpoints we show that when consumers have downward sloping rather than perfectly inelastic demand a price location equilibrium with price undercutting barred exists if the market is sufficiently long relative to the number of firms

the impact of brand selection on price competition a double edged sword brand selection the number of alternative brands of a particular product is a double edged sword in that on the one hand it increases rivalry and so stimulates price competition but on the other hand it causes consumers to be poorly informed and thus vulnerable to exploitation and so dampens price competition this phenomenon is demonstrated analytically and empirically with analytical work based on hotelling s unit market line using price dispersion as a measure of the state of price competition it is shown that a widening in price dispersion that is a lessening of price competition arises from an increase in brand selection any increase in the number of alternative brands on offer brand selection causes an increase in dif ness distortion in information function which in turn causes an increase in price dispersion a lessening of price competition the phenomenon is demonstrated empirically through a small survey of household beverages

optimal asset allocation risk and information uncertainty abstract in asset allocation problem the distribution of the assets is usually assumed to be known in order to identify the optimal portfolio in practice we need to estimate their distribution the estimations are not necessarily accurate and it is known as the uncertainty problem many researches show that most people are uncertainty aversion and this affects their investment strategy in this article we consider risk and information uncertainty under a common asset allocation framework the effects of risk premium and covariance uncertainty are demonstrated by the worst scenario in a set of measures generated by a relative entropy constraint the nature of the uncertainty and its impacts on the asset allocation are discussed

on aggregation of information in competitive markets the dynamic case abstract this article examines in the spirit of hellwig 1980 how a dynamic competitive security market aggregates and communicates information between various market participants at every instant it employs a continuous time economy consisting of a large number of heterogeneous agents who are endowed with noisy private signals about the risky asset payoff of differing precision it yields a stationary rational expectations equilibrium in which at every instant the agents use information contained in the market prices without rendering their private information redundant it shows that the market price reflects only that part of private information which is common to many signals and thus extends hellwig s single period results to a multi period model

the economics of product variety a survey demand for variety may arise from a taste for diversity in individual consumption and or from diversity in tastes even when each consumer chooses a single variant the full degree of variety potentially demanded will not in general be supplied because scale economies even to a small degree mean that the potential welfare or revenue gain from greater variety must be balanced against the lower unit production costs with fewer variants the economics of product variety consists essentially in analysing the effect of this balance in different situations and comparing the degree of product variety for different market structures with each other and with the optimum the survey commences with the work on market structures with single product firms generalized monopolistic competition tracing modern developments in both the chamberlinian and hotelling traditions the latter has been particularly fruitful due to the expansion of the original locational ideas into virtual spaces in product characteristics the emphasis in recent work on product variety has been on multiproduct firms in both monopolistic and oligopolistic structures including strategic market preemption although most work has been in a full information context there have been advances in product variety under imperfect information either by consumers to properties of the firms products or firms as to consumers demands

the spillover effects of biofuel policy on participation in the conservation reserve program abstract this paper studies the spillover effects of rising biofuel production on participation in the conservation reserve program landowner participation decisions are modeled using a real options framework we develop a land use decision model that captures biofuel driven structural changes in market demand and derive threshold conditions that trigger participation in the program we then quantify the impacts of biofuel production on participation at both the national and state levels using monte carlo simulations the model is also used to analyze how changes in the persistence of the biofuel production boom and in the volatility of farming returns affect conservation participation decisions policy implications of the results are discussed

robustly strategic consumption portfolio rules with informational frictions this paper provides a tractable continuous time constant absolute risk aversion gaussian framework to explore how the interactions of fundamental uncertainty model uncertainty due to a preference for robustness and state uncertainty due to information processing constraints rational inattention affect strategic consumption portfolio rules and precautionary savings in the presence of uninsurable labor income specifically after solving the model explicitly i compute and compare the elasticities of strategic asset allocation and precautionary savings to risk aversion robustness and inattention furthermore for plausibly estimated and calibrated model parameters i quantitatively analyze how the interactions of model uncertainty and state uncertainty affect the optimal share invested in the risky asset and show that they can provide a potential explanation for the observed stockholding behavior of households with different education and income levels this paper was accepted by neng wang finance

the impacts of uncertainties in a real options model under incomplete information abstract this paper examines the impact with respect to the uncertainty of the underlying state variable profit uncertainty on the real options model in a situation of incomplete information profit uncertainty has not incorporated into the real options model under incomplete information in that the underlying state variable is not formulated as the stochastic process see e g bernardo a e chowdhry e b 2002 resources real options and corporate strategy journal of financial economics 63 211 234 we extend the model developed by bernardo and chowdhry to formulate the underlying state variable as the stochastic process we conclude that profit uncertainty has the same type of impact on the real options value and its triggers both under complete and incomplete information

optimal portfolio choice under incomplete information models of asset pricing generally assume that the variables which characterize the state of the economy are observable however the distributional properties of asset prices that are relevant for portfolio decisions are in general not observable and therefore must be estimated the estimation of expected returns is a particularly difficult problem and estimation errors are likely to be substantial in this light it is reasonable to examine whether the assumption of observability of expected returns and other relevant state variables causes significant mis specification in equilibrium models of asset prices this paper has three main objectives first to derive optimal estimators for the unobservable expected instantaneous returns using observations of past realized returns second to establish that estimation and portfolio choice can be solved in two separate steps third to analyze the impact of estimation error on investment choices the estimators of expected returns are in general not consistent i e the estimation error does not tend to disappear asymptotically the effects of the estimation error therefore cannot be ignored even if realized returns are observed continuously over an infinite time period

on the market consistent valuation of fish farms using the real option approach and salmon futures we consider the optimal harvesting problem for a fish farmer in a model which accounts for stochastic prices featuring schwartz 1997 two factor price dynamics unlike any other literature in this context we take account of the existence of a newly established market in salmon futures which determines risk premia and other relevant variables that influence risk averse fish farmers in their harvesting decision we consider the cases of single and infinite rotations the value function of the harvesting problem determined in our arbitrage free setup constitutes the fair values of lease and ownership of the fish farm when correctly accounting for price risk the data set used for this analysis contains a large set of futures contracts with different maturities traded at the fish pool market between 12 06 2006 and 22 03 2012 we assess the optimal strategy harvesting time and value against two alternative setups the first alternative involves simple strategies which lack managerial flexibility the second alternative allows for managerial flexibility and risk aversion as modeled by a constant relative risk aversion utility function but without access to the salmon futures market in both cases the loss in project value can be very significant and in the second case is only negligible for extremely low levels of risk aversion in consequence for a risk averse fish farmer the presence of a salmon futures market as well as managerial flexibility are highly important

product differentiation with consumer arbitrage abstract we determine the equilibrium to a game where two firms set delivered price schedules and consumers simultaneously declare where they want to take delivery of the product equilibrium pricing policies provide incentives for consumers not to demand their preferred varieties but rather to purchase more standard varieties this behavior may decrease market diversity the demanded varieties tend to agglomerate around the market center we also show that it is efficient for the cost of adapting the product to consumers to be shared through arbitrage but oligopoly gives rise to an inefficient level of personal arbitrage

the effects of product differentiation on collusive pricing abstract using the spatial competition framework of hotelling 1929 this paper explores the relationship between the degree of product differentiation and the ability of firms to collude with respect to price we show that the minimum discount factor required to support the joint profit maximum as an equilibrium outcome monotonically increases as products become better substitutes when the joint profit maximum cannot be supported the optimal collusive price is shown to decline as products become more substitutable these findings suggest that firms producing stronger substitutes tend to find it tougher to collude in terms of their product price

on hotelling s competition with non uniform customer distributions abstract hotelling s competition in a two stage location price game is examined with increasing densities of consumers towards the centre it is shown that there is a range of rather even distributions for which firms locate at opposite ends of the market as the distribution becomes more concentrated duopolists will tend to move inside the market

two stage perfect equilibrium in hotelling s model hotelling i 929 suggests that his spatial competition model can be used to describe a wide range of differentiation problems he points to the selection of product variety within an industry as a potential application most of the subsequent work in his tradition has taken the equivalence of the two problems for granted in this note we look more closely at this equivalence we distinguish between two types of differentiated products according to the variety of preferences assumed with respect to those products building on this distinction we recognize that the demand faced by a firm locating on hotelling s line is analogous to the demand faced by a firm selecting a horizontally differentiated product it should be emphasized thus that the equivalence between the geographical and the product selection problem is by no means general and relies on specific assumptions about consumers preferences next we formulate a small model close to hotelling s one in which firms select a horizontally differentiated product within this model it will be shown that a pure strategy price equilibrium exists for every pair of products this statement is to be contrasted with the results of d aspremont et al i979 who have shown that in the original hotelling s setting an equilibrium fails to exist when firms are too close together 1 in addition we will examine the product selection problem faced by firms in a two stage game in the first stage each firm selects a product in the second stage the firm defines a price for its product we will seek the existence of a perfect equilibrium in this game a perfect equilibrium in this context can be viewed as a nash equilibrium in a game in which firms select a product aware of the non cooperative price equilibrium that will occur for each of their choices it will be shown that contrary to hotelling s principle the two firms will maximise their differentiation i e firms will locate at opposite ends of the market

can price competition dominate market segmentation this note analyses duopoly competition in a two stage location price game while allowing each firm to establish a couple of outlets both the circle and the line model of spatial competition are considered our main result is clear cut in equilibrium neither firm will take up the opportunity of opening two stores this is a warning that market segmentation i e competition from multiple outlets might not be attractive at all because it entails more intense price competition

aggregation and imperfect competition on the existence of equilibrium we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result provides general conditions under which there exists a pure strategy price equilibrium for any number of firms producing any set of products this includes products with multi dimen sional attributes in addition to the proof of existence we provide conditions for uniqueness our analysis covers location models the characteristics approach and probabilistic choice together in a unified framework to prove existence we employ aggregation theorems due to prekopa 1971 and borell 1975 our companion paper caplin and nalebuff 1991 introduces these theorems and develops the application to super majority voting rules we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result is that there exists a pure strategy price equilibrium for any number of firms producing any set of products in addition to the proof of existence we provide conditions for uniqueness our model both unites diverse strands of the earlier literature and opens up uncharted areas for future analysis in particular we expand the traditional one dimensional framework to allow for multi dimen sional product differentiation our approach involves twin restrictions on consumer preferences one on individuals preferences the other on the distribution of preferences across society these are generalizations of the restrictions supporting 64 majority rule presented in caplin and nalebuff 1988 to prove existence we apply a new technique of aggregation this technique is valuable in a variety of other problems in the companion paper we use the aggregation result to generalize our earlier work on 64 majority rule and to characterize the relationship between the distribution of human capital and the distribution of income caplin and nalebuff 1991 there are additional applications in statistics and in search theory we begin with a brief review of the early literature on imperfect competition describing in more detail the existence problem and previous solutions section 3 presents our twin assumptions and shows that they cover many standard cases in section 4 we introduce the aggregation theorem and use it in the analysis of demand functions the proof of existence of equilibrium is in section

on the interplay of informational spillovers and payoff externalities this thesis consists of four independent essays which consider different topics in information economics and political economy the first two papers are variants of the same idea an uninformed principal e g a government will make a decision in order to gain more information it may consult two experts however these experts have a private interest in certain policies being implemented the question is to gain as much information as possible should the principal consult experts who are biased in the same direction or experts who prefer different decisions the main result is that as long as collusion between experts can be prevented homogeneous panels are superior to heterogeneous ones and this advantage increases with the experts informational precision in the third paper two firms consider entry in a new product market and must decide when to enter the market and how to design their product firms do not know for certain what the best design is so both firms want to outwait the other s decision in order to gain more information the focus of the paper is on which firm will make the first decision the main result is that if products are strong strategic substitutes the worst informed firm makes the first decision in equilibrium the analysis should apply to a range of other contexts such as investors trading decisions or the policy choices of political candidates the final paper asks the following question could it be that parties in a two party system may benefit from using several candidates in the same election to promote the use of multiple candidates i assume that a party never runs the risk of having its votes split up among its candidates despite this it turns out that parties have a strong incentive to restrict their number of nominees paradoxically it seems that the more uncertain parties are about voter opinion the fewer candidates they want to use in particular with a uniform voter distribution the optimal number of candidates is one

mixed oligopoly and spatial agglomeration abstract we investigate a mixed market where a state owned welfare maximizing public firm competes against profit maximizing private firms we use a circular city model with quantity setting competition in contrast to a pure market case discussed by pal 1998a spatial agglomeration of private firms always appears in equilibrium all private firms locate at the same point and the public firm locates at the opposite side we also find that this equilibrium pattern of the location is second best provided that output of each private firm cannot be controlled by the social planner jel classification h42 l13 oligopole mixte et agglomeration spatiale les auteurs examinent un marche mixte ou une entreprise publique possedee par l etat et cherchant a maximiser le niveau de bien etre est en concurrence avec des entreprises privees qui cherchent a maximiser leurs profits on utilise un modele de cite circulaire ou la concurrence se fait en choisissant la quantite produite en contraste avec le cas du marche parfait discute par pal 1998a l agglomeration spatiale des entreprises privees parait etre en equilibre toutes les entreprises privees se localisent au meme point et l entreprise publique se localise du cote oppose il appert que ce pattern d equilibre de localisation est un equilibre de second ordre compte tenu du fait que la production de chaque entreprise privee ne peut etre controlee par le planificateur social