|
on Microeconomics |
| By: | Seres, Gyula (Tilburg University, Center For Economic Research) |
| Abstract: | This paper considers dynamic pricing strategies in a durable good monopoly model with uncertain commitment power to set price paths. The type of the monopolist is private information of the firm and not observable to consumers. If commitment to future prices is not possible, the initial price is high in equilibrium, but the firm falls prey to the Coase conjecture later to capture the residual demand. The relative price cut is increasing in the probability of commitment as buyers anticipate that a steady price is likely and purchase early. Pooling in prices may occur for perpetuity if commitment is suciently weak. Polling for innity is also preserved if committing to a high price is endogenously chosen by the firm. |
| Keywords: | monopoly; commitment; Information asymmetry |
| JEL: | D42 L12 D61 D82 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:bece5078-67ec-458b-807c-3c18fc79e2fa&r=all |
| By: | Franz Dietrich (PSE - Paris School of Economics, CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper proposes a simple unified framework of choice under changing awareness, addressing both outcome awareness and (nature) state awareness, and both how fine and how exhaustive the awareness is. Six axioms characterize an (essentially unique) expected-utility rationalization of preferences, in which utilities and probabilities are revised according to three revision rules when awareness changes: (R1) utilities of unaffected outcomes are transformed affinely; (R2) probabilities of unaffected events are transformed proportionally; (R3) enough probabilities ‘objectively' never change (they represent revealed objective risk). Savage's Theorem is a special case of the theorem, namely the special case of fixed awareness, in which our axioms reduce to Savage's axioms while R1 and R2 hold trivially and R3 reduces to Savage's requirement of atomless probabilities. Rule R2 parallels Karni and Viero's (2013) ‘reverse Bayesianism' and Ahn and Ergin's (2010) ‘partition-dependence'. The theorem draws mathematically on Kopylov (2007), Niiniluoto (1972) and Wakker (1981). |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01743898&r=all |
| By: | François Durand (Nokia Bell Labs [Espoo], LINCS - Laboratory of Information, Network and Communication Sciences - Inria - Institut National de Recherche en Informatique et en Automatique - Institut Mines-Télécom [Paris] - SU - Sorbonne Université); Antonin Macé (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - La plante et son environnement - CNRS - Centre National de la Recherche Scientifique - INA P-G - Institut National Agronomique Paris-Grignon - UP11 - Université Paris-Sud - Paris 11 - INRA - Institut National de la Recherche Agronomique); Matias Nunez (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We analyze Approval Voting in Poisson games endowing voters with private values over three candidates. We firsts how that any stable equilibrium is discriminatory: one candidate is commonly regarded as out of contention. We fully characterize stable equilibria and divide them into two classes. In direct equilibria, best responses depend only on ordinal preferences. In indirect equilibria, preference intensities matter. Counter-intuitively, any stable equilibrium violates the ordering conditions, a set of belief restrictions used to derive early results in the literature. We finally use Monte-Carlo simulations to estimate the prevalence of the different sorts of equilibria and their likelihood to elect a Condorcet winner. |
| Keywords: | Approval voting,Poisson games,Stable equilibria,Monte-Carlo simulations |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02049865&r=all |
| By: | Patrick Legros; Konrad Stahl |
| Abstract: | Increased competition tends to benefit all buyers with increasing product variety and decreasing prices. However, if local and external market channels compete for the same class of products, increased competition from the external market crowds out local variety. Under local monopoly, local buyer surplus co-moves with external buyer surplus. Under local free entry oligopoly, buyer surplus is U-shaped. If buyer surplus in the external market is low, local surplus is better provided by local oligopoly, but moves against external surplus; if it is high, local and external surplus co-move, and local surplus is better provided by local monopoly. |
| Keywords: | Global competition, Monopoly, Oligopoly, Search |
| JEL: | D83 L12 L13 L81 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2019_087&r=all |
| By: | Ilai Bistritz; Nasimeh Heydaribeni; Achilleas Anastasopoulos |
| Abstract: | We consider an environment where a finite number of players need to decide whether to buy a certain product (or adopt a trend) or not. The product is either good or bad, but its true value is not known to the players. Instead, each player has her own private information on the quality of the product. Each player can observe the previous actions of other players and estimate the quality of the product. A player can only buy the product once. In contrast to the existing literature on informational cascades, in this work players get more than one opportunity to act. In each turn, a player is chosen uniformly at random from all players and can decide to buy or not to buy. His utility is the total expected discounted reward, and thus myopic strategies may not constitute equilibria. We provide a characterization of structured perfect Bayesian equilibria (sPBE) with forward-looking strategies through a fixed-point equation of dimensionality that grows only quadratically with the number of players. In particular, a sufficient state for players' strategies at each time instance is a pair of two integers, the first corresponding to the estimated quality of the good and the second indicating the number of players that cannot offer additional information about the good to the rest of the players. We show existence of such equilibria and characterize equilibria with threshold strategies w.r.t. the two aforementioned integers. Based on this characterization we study informational cascades and show that they happen with high probability for a large number of players. Furthermore, only a small portion of the total information in the system is revealed before a cascade occurs. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.01327&r=all |
| By: | David Pérez-Castrillo; Marilda Sotomayor |
| Abstract: | In the one-sided assignment game any two agents can form a partnership and decide how to share the surplus created. Thus, in this market, an outcome involves a matching and a vector of payoffs. Contrary to the two-sided assignment game, stable outcomes often fail to exist in the one-sided assignment game. We introduce the idea of conflict-free outcomes: they are individually rational outcomes where no matched agent can form a blocking pair with any other agent, neither matched nor unmatched. We propose the set of Pareto-optimal (PO) conflict-free outcomes, which is the set of the maximal elements of the set of conflict-free outcomes, as a natural solution concept for this game. We prove several properties of conflict-free outcomes and PO conflict-free outcomes. In particular, we show that each element in the set of PO conflict-free payoffs provides the maximum surplus out of the set of conflict-free payoffs, the set is always non-empty and it coincides with the core when the core is non-empty. We further support the set of PO conflict-free outcomes as a natural solution concept by suggesting an idealized partnership formation process that leads to these outcomes. In this process, partnerships are formed sequentially under the premise of optimal behavior and two agents only reach an agreement if both believe that more favorable terms will not be obtained in any future negotiations. |
| Keywords: | matching, assignment game, core, Pareto-optimal outcome, conflict-free outcome |
| JEL: | C78 D78 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1094&r=all |
| By: | Lionel de Boisdeffre (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour) |
| Abstract: | The paper demonstrates the existence of sequential equilibria in a pure exchange economy, where asymmetrically informed agents exchange consumption goods and securities of all kinds, on incomplete markets. Standard models rely on Radner's (1972, 1979) rational expectation assumptions, along which agents know the maps between the information signals, the states of nature and the equilibrium prices. As shown by Hart (1975), equilibrium may then fail to exist, even when agents have symmetric information and smooth preferences. In that setting, Duffie-Shafer (1985) shows, from differential topology arguments, that interior equilibria exist generically. The current paper proceeds differently. It drops rational expectations to allow for an infinitesimal uncertainty over future spot prices. This device permits to circumvent Hart's 1975 problem, without using differential topology. Then, the paper shows that a generic condition on payoffs and forecasts guarantees the existence of equilibria. It is consistent with non-transitive preferences, non-interior consumptions, asymmetric information and normalized spot prices at equilibrium. It also serves to prove existence in a more general model, which drops Radner's rational expectations. |
| Abstract: | Cet article démontre l'existence d'équilibres séquentiels dans une économie d'échange pur, où des agents asymétriquement informés échangent des biens de consommation et des actifs financiers de toutes sortes sur des marchés incomplets. Les modèles standards se fondent sur les hypothèses d'anticipations rationnelles de Radner (1972, 1979), selon lesquelles les agents connaissent la fonction associant les signaux d'information privés des agents, les états de la nature et les prix d'équilibre sur chaque marché spot. Comme le montre Hart (1975), l'équilibre peut ne pas exister sous ces hypothèses, même lorsque tous les agents ont des préférences ordonnées et lisses et la même information. Dans ce cadre, Duffie-Safer (1985) démontre, à partir de la topologie différentielle, l'existence générique d'équilibres intérieurs. Le présent papier procède différemment. Il abandonne les anticipations rationnelles pour permettre une incertitude infinitésimale sur les prix spots de demain. Cela permet de contourner le problème d'existence de Hart (1975), sans recourir à la topologie différentielle. Le papier démontre, ensuite, qu'une condition sur les rendements des actifs et les anticipations des agents, réalisée génériquement, restaure l'existence de l'équilibre sur tous les marchés. Ce résultat est compatible avec des préférences non transitives, des consommations au bord, une information asymétrique et des prix spots normalisés à l'équilibre. Il est utilisé, dans un autre papier, pour prouver l'existence d'équilibres séquentiels dans un modèle plus général d'anticipation des prix, affranchi des hypothèses d'anticipations rationnelles de Radner. |
| Keywords: | sequential equilibrium,perfect foresight,existence of equilibrium,rational expectations,financial markets,asymmetric information,marchés financiers,anticipations rationnelles,équilibre séquentiel,anticipations parfaites,existence de l'équilibre,asymétrie d'information,arbitrage |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01903586&r=all |
| By: | Franz Dietrich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Brian Jabarian (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | How should we evaluate options when we are uncertain about the correct standard of evaluation, for instance due to conflicting normative intuitions? Such ‘normative' uncertainty differs from ordinary ‘empirical' uncertainty about an unknown state, and raises new challenges for decision theory and ethics. The most widely discussed proposal is to form the expected value of options, relative to correctness probabilities of competing valuations. We show that the expected-value theory is just one of four natural expectation-based theories. These theories differ in the attitudes to normative risk and to empirical risk. The ordinary expected-value theory imposes neutrality to normative risk, whereas its attitude to empirical risk is impartial, i.e., determined by the risk attitudes of the competing valuations deemed possible. The three other theories are, respectively, neutral to both types of risk; impartial to both types of risk; or neutral to empirical but impartial to normative risk. We conditionally defend the theory which is impartial to all risk - the impartial value theory - on the grounds that it respects risk-attitudinal beliefs rather than imposing an ad-hoc-risk attitude. Meanwhile, our analysis shows how one can address empirical and normative uncertainty within a unified formal framework, and rigorously define risk attitudes of theories. |
| Abstract: | Comment devons-nous évaluer des options de choix lorsque nous ne savons pas quelle méthode d'évaluation est correcte, par exemple à cause d'intuitions normatives concurrentes ? Ce type d'incertitude, nommée « incertitude normative », diffère de l'incertitude standard portant sur les états empiriques du monde, nommée « incertitude empirique ». L'incertitude normative constitue un nouveau challenge pour les sciences économiques et l'éthique contemporaine. La proposition la plus discutée dans le débat est de former la valeur normative espérée des options relativement aux croyances normatives de l'agent. Nous montrons que la théorie de la valeur normative espérée n'est qu'une des quatre formes de théories basées sur l'espérance. Ces théories diffèrent dans leurs attitudes aux risques normatifs et empiriques. La théorie de la valeur normative espérée impose une attitude neutre face au risque normatif, tandis que son attitude face au risque empirique est impartiale, c'est-à-dire seulement déterminée par les attitudes au risque des différentes méthodes d'évaluation jugées possibles par l'agent. Les trois autres théories sont respectivement : neutre face aux deux types de risque ; impartiale face aux deux types de risque ; neutre face au risque empirique mais impartiale face au risque normatif. Nous défendons la théorie qui est impartiale face aux deux types de risque, la théorie impartiale de la valeur, sur la base que cette théorie respecte entièrement les croyances normatives de l'agent concernant la « bonne » attitude face au risque plutôt que d'imposer de manière ad hoc une attitude particulière face au risque. Notre article montre comment nous pouvons traiter à travers un seul cadre formel unifié l'incertitude empirique et l'incertitude normative et définir de manière rigoureuse les attitudes face au risque de théories évaluatives. |
| Keywords: | empirical uncertainty,normative uncertainty,risk attitude,expected value,impartial value,incertitude empirique,incertitude normative,attitude face au risque,valeur normative espérée,valeur impartiale |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01903642&r=all |
| By: | Franz Dietrich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Antonios Staras (UEA - University of East Anglia [Norwich]); Robert Sugden (UEA - University of East Anglia [Norwich]) |
| Abstract: | John Broome has developed an account of rationality and reasoning which gives philosophical foundations for choice theory and the psychology of rational agents. We formalize his account into a model that differs from ordinary choice-theoretic models through focusing on psychology and the reasoning process. Within that model, we ask Broome's central question of whether reasoning can make us more rational: whether it allows us to acquire transitive preferences, consistent beliefs, non-akratic intentions, and so on. We identify three structural types of rationality requirements: consistency requirements, completeness requirements, and closedness requirements. Many standard rationality requirements fall under this typology. Based on three theorems, we argue that reasoning is successful in achieving closedness requirements, but not in achieving consistency or completeness requirements. We assess how far our negative results reveal gaps in Broone's theory, or deficiencies in choice theory and behavioural economics. |
| Abstract: | John Broome a développé une théorie de la rationalité et du raisonnement qui donne des fondements philosophiques au choix rationnel et à la psychologie d'acteurs rationnels. Nous formalisons cette théorie en définissant un cadre qui diffère de modèles classiques du choix rationnel, en mettant au centre la psychologie et le raisonnement. A travers notre modèle, nous reposons la question centrale de Broome si le raisonnement nous permet d'augmenter notre rationalité : si le raisonnement nous fait acquérir des préférences transitives, des croyances cohérentes, des intentions conformes à nos buts (" non akratiques ") etc. Nous identifions trois types de conditions de rationalité : des conditions de cohérence, des conditions de complétude et des conditions de clôture. Un grand nombre de conditions de rationalité classiques tombent sous cette taxonomie. En nous appuyant sur trois théorèmes, nous montrons que le raisonnement est utile pour arriver à satisfaire des conditions de clôture, mais pas des conditions de cohérence ou de complétude. Nous évaluons enfin dans quelle mesure nos résultats négatifs révèlent des problèmes dans la théorie Broomeienne ou posent des problèmes à la théorie du choix rationnel et l'économie comportementale. |
| Keywords: | rationality,reasoning,beliefs,consistency,completeness,deductive closure,rationalité,raisonnement,intentions,croyances,préférences,cohérence,complétude,clôture déductive |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01904091&r=all |
| By: | Bhaskar Dutta (Department of Economics, Ashoka University); Hannu Vartiainen (Department of Economics, Ashoka University) |
| Abstract: | Farsighted formulations of coalitional formation, for instance by Harsanyi (1974) and Ray and Vohra(2015), have typically been based on the von NeumannMorgenstern (1944) stable set. These farsighted stable sets use a notion of indirect dominance in which an outcome can be dominated by a chain of coalitional 'moves' in which each coalition that is involved in the sequence eventually stands to gain. Dutta and Vohra(2016) point out that these solution concepts do not require coalitions to make optimal moves. Hence, these solution concepts can yield unreasonable predictions. Dutta and Vohra (2016) restricted coalitions to hold common, history independent expectations that incorporate optimality regarding the continuation path. This paper extends the Dutta-Vohra analysis by allowing for history dependent expectations. The paper provides characterization results for two solution concepts corresponding to two versions of optimality. It demonstrates the power of history dependence by establishing nonemptyness results for all finite games as well as transferable utility partition function games. The paper also provides partial comparisons of the solution concepts to other solutions. |
| Keywords: | Coalition |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ash:wpaper:1006&r=all |
| By: | Decarolis, Francesco; Goldmanis, Maris; Penta, Antonio |
| Abstract: | The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the Generalized Second Price auction (GSP, used by Google and Microsoft-Bing and Yahoo!) and the of VCG mechanism (used by Facebook). We find that, despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction both in terms of revenues and efficiency. |
| Keywords: | Collusion; Digital Marketing Agencies; Facebook; Google; GSP; Internet Auctions; Online Advertising; VCG. |
| JEL: | C72 D44 L81 |
| Date: | 2019–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:122943&r=all |
| By: | Ezra Einy (BGU); Ori Haimanko (BGU); David Lagziel (BGU) |
| Keywords: | strong robustness to incomplete information; Nash equilibrium; correlated equilibrium |
| JEL: | C62 C72 D82 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:1901&r=all |
| By: | Francis Bloch (Department of Economics, Ashoka University); Bhaskar Dutta (Department of Economics, Ashoka University); Mihai Manea (Department of Economics, Ashoka University) |
| Abstract: | We analyze the formation of partnerships in social networks. Players need favors at random times and ask their neighbors in the network to form exclusive long-term partnerships that guarantee reciprocal favor exchange. Refusing to provide a favor results in the automatic removal of the underlying link. Players agree to provide the first favor in a partnership only if they otherwise face the risk of eventual isolation. In equilibrium, players essential for realizing every maximum matching can avoid this risk and enjoy higher payoffs than inessential players.Although the search for partners is decentralized and reflects local partnership opportunities, the strength of essential players drives efficient partnership formation in every network. Equilibrium behavior is determined by the classification of nodes in the Gallai-Edmonds decomposition of the underlying network. |
| Keywords: | networks, efficiency, decentralized markets, partnerships, favor exchange, maximum matchings, Gallai-Edmonds decomposition, under-demanded. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ash:wpaper:1014&r=all |
| By: | Kaitong Hu (CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique); Zhenjie Ren (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Junjian Yang (Fakultät für Mathematik und Geoinformation [Wien] - TU Wien - Technische Universität Wien) |
| Abstract: | We consider a moral hazard problem with multiple principals in a continuous-time model. The agent can only work exclusively for one principal at a given time, so faces an optimal switching problem. Using a randomized formulation, we manage to represent the agent's value function and his optimal effort by an Itô process. This representation further helps to solve the principals' problem in case we have infinite number of principals in the sense of mean field game. Finally the mean field formulation is justified by an argument of propagation of chaos. |
| Keywords: | Moral hazard,contract theory,backward SDE,optimal switching,mean field games,propagation of chaos |
| Date: | 2019–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02088486&r=all |
| By: | Stefanie Gerke; Gregory Gutin; Sung-Ha Hwang; Philip Neary |
| Abstract: | This paper considers incentives to provide goods that are partially excludable along social links. Individuals face a capacity constraint in that, conditional upon providing, they may nominate only a subset of neighbours as co-beneficiaries. Our model has two typically incompatible ingredients: (i) a graphical game (individuals decide how much of the good to provide), and (ii) graph formation (individuals decide which subset of neighbours to nominate as co-beneficiaries). For any capacity constraints and any graph, we show the existence of specialised pure strategy Nash equilibria - those in which some individuals (the Drivers, D) contribute while the remaining individuals (the Passengers, P) free ride. The proof is constructive and corresponds to showing, for a given capacity, the existence of a new kind of spanning bipartite subgraph, a DP-subgraph, with partite sets D and P. We consider how the number of Drivers in equilibrium changes as the capacity constraints are relaxed and show a weak monotonicity result. Finally, we introduce dynamics and show that only specialised equilibria are stable against individuals unilaterally changing their provision level. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.01693&r=all |
| By: | Christopher P. Chambers; Federico Echenique |
| Abstract: | We introduce and study the property of orthogonal independence, a restricted additivity axiom applying when alternatives are orthogonal. The axiom requires that the preference for one marginal change over another should be preferred after each marginal change has been shifted in a direction that is orthogonal to both. We show that continuous preferences satisfy orthogonal independence if and only if they are spherical: their indifference curves are spheres with the same center, with preference being "monotone" moving away from the center. Spherical preferences include linear preferences as a special (limiting) case. We discuss different applications to economic and political environments. Our result delivers Euclidean preferences in models of spatial voting, quadratic welfare aggregation in social choice, and expected utility in models of choice under uncertainty. As an extension, we consider an endogenous notion of orthogonality. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.02917&r=all |
| By: | Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | In this paper, I study how a principal can provide incentives, at minimal cost, to a group of agents who have pro-social preferences in order to induce successful coordination in the presence of network externalities. I show that agents' pro-social preferences - specifically a preference for the sum of the agents' payoffs and/or for the minimum payoff - lead to a decrease in the implementation cost for the principal, a decrease in the payoff of each agent and an increase in discrimination. The model can be applied in various contexts and it delivers policy implications for designing policies that support the adoption of new technologies, for motivating a group of workers or for inducing successful coordination of NGOs. |
| Keywords: | principal,agents,pro-social preferences,incentives,externality |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02056347&r=all |
| By: | Boone, Jan (Tilburg University, TILEC); Schuett, Florian (Tilburg University, TILEC); Tarantino, E. |
| Abstract: | Many observers have voiced concerns that standards create essentiality and thus monopoly power for the holders of standard essential patents (SEPs). To address these concerns, Lerner and Tirole (2015) advocate structured price commitments, whereby SEP holders commit to the maximum royalty they would charge were their technology included in the standard. We consider a setting in which a technology implementer holds private information about demand. In this setting, price commitments increase efficiency not only by curbing SEP holders' market power, but also by alleviating distortions in the design of the royalty scheme. In the absence of price commitments, the SEP holder distorts the implementer's output downward in the low-demand state to reduce the high-demand type's information rent. Price commitments reduce this distortion. |
| Keywords: | standardization; standard-essential patents; price commitments; Information asymmetry |
| JEL: | D82 L15 L24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutil:b4f497a7-bdcd-4c1b-90ef-f4f18728211d&r=all |
| By: | Anastasios Dosis (ESSEC - ESSEC Business School - Essec Business School - Economics Department - Essec Business School, THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique); Abhinay Muthoo (Departement of Economics - University of Warwick - University of Warwick [Coventry]) |
| Abstract: | We study a two-stage, winner-takes-all, R&D race, in which, at the outset, firms are uncertain regarding the viability of the project. Learning through experimentation introduces a bilateral (dynamic) feedback mechanism. For relatively low-value products , the equilibrium stopping time coincides with the socially efficient stopping time although firms might experiment excessively in equilibrium; for relatively high-value products, firms might reduce experimentation and stop rather prematurely due to the fundamental free-riding effect. Perhaps surprisingly, a decrease in the value of the product can spur experimentation. |
| Keywords: | Experimentation,Learning,Dynamic R&D competition,inefficiency |
| Date: | 2019–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02102518&r=all |
| By: | Itai Arieli; Moran Koren; Rann Smorodinsky |
| Abstract: | We study the implications of endogenous pricing for learning and welfare in the classic herding model . When prices are determined exogenously, it is known that learning occurs if and only if signals are unbounded. By contrast, we show that learning can occur when signals are bounded as long as non-conformism among consumers is scarce. More formally, learning happens if and only if signals exhibit the vanishing likelihood property introduced bellow. We discuss the implications of our results for potential market failure in the context of Schumpeterian growth with uncertainty over the value of innovations. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.03452&r=all |
| By: | Gregor Langus; Vilen Lipatov; Jorge Padilla |
| Abstract: | We set up a model to analyze the effects of mergers between sellers of complementary components where firms invest in compatibility and can engage in bundling. We consider the impact of merger on prices, investment and consumer surplus. We also analyse when the merged firm may have an incentive and ability to foreclose rivals. |
| Keywords: | mergers, complementary goods, welfare effects, foreclosure, compatibility |
| JEL: | L13 L41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7617&r=all |