Search

This paper explores a licensor's choice between charging a per-unit royalty or a …fixed fee when her innovation is covered by a weak patent, i.e. a patent that is likely to be invali- dated by a court if challenged. Using a general model where the nature of competition is not speci…ed, we show that the patent holder prefers to use a per-unit royalty scheme if the strategic e¤ect of an increase in a potential licensee's unit cost on the aggregate equi- librium pro…t is positive. To show the mildness of the latter condition, we establish that it holds in a Cournot (resp. Bertrand) oligopoly with homegenous (resp. heterogenous) products under very general assumptions on the demands faced by …rms. As a byproduct of our analysis, we contribute to the oligopoly literature by o¤ering some new insights of independent interest regarding the e¤ects of cost variations on Cournot and Bertrand equilibria.

"This paper provides a thorough analysis of oligopolistic markets with positive demand- side network externalities and perfect compatibility. The minimal structure imposed on the model primitives is such that industry output increases in a firm's rivals’ total output as well as in the expected network size. This leads to a generalized equilibrium existence treatment that includes guarantees for a nontrivial equilibrium, and some insight into possible multiplicity of equilibria. We formalize the concept of industry viability and show that is it always enhanced by having more firms in the market and/or by technological improvements. We also characterize the effects of market structure on industry performance, with an emphasis on departures from standard markets. The approach relies on latticetheoretic methods, which allow for a unified treatment of various general results in the literature on network goods. Several illustrative examples with closed-form solutions are also provided." (author's abstract)

We consider the issue of first versus second-mover advantage in differentiated-product Bertrand duopoly with general demand and asymmetric linear costs. We generalize existing results for all possible combinations where prices are either strategic substitutes and/or complements, dispensing with common extraneous assumptions. We show that a firmwith a sufficiently large cost lead over its rival has a first mover advantage. For the linear version of the model, we invoke a naturalendogenous timing scheme coupled with equilibrium selection according to risk-dominance. This yields sequential play with the low-cost firm as leader as the unique equilibrium outcome.

An infinite-horizon, stochastic model of entry and exit with sunk costs and imperfect competition is constructed. Simple examples provide insights into: (1) the relationship between sunk costs and industry concentration, (2) entry when current profits are negative, and (3) the relationship between entry and the length of the product cycle. A subgame perfect Nash equilibrium for the general dynamic stochastic game is shown to exist as a limit of finite-horizon equilibria. This equilibriumhas a relatively simple structure characterized by two numbers per finite history. Under very general conditions, it tends to exhibit excessive entry and insufficient exit relative to a social optimum.

We provide a simple theoretical foundation, based on the theory of Markov chains, for the objective empirical procedure for journal ranking devised by Liebowitz and Palmer.An elementary characterization is derived that substantially clarifies the meaning, scope and underlying intuition of the procedure, and allows a precise illustrative discussion of its strengths and weaknesses. Several suggestions are made to correct its shortcomings, which may prove useful in much-needed future rankings. The present analysis suggests that asuitably amended version of the LP procedure would emerge as a highly adequate measure for ranking journals.

This survey provides an extensive account of research in economics based on the stochastic games paradigm. Its area-by-area coverage is in the form of an overview, and includes applications in resource economics, industrial organization, macroeconomics, market games, experimental and empirical economics. For methodologically defined frameworks, the coverage is somewhat more detailed (to the extent that the material is not covered elsewhere in this volume), and includes the open-loop concept, the linear-quadratic model, myopic equilibrium, games of perfect information, and stochastic games with a continuum of players.

This chapter considers a recent trend in the application of stochastic games to economics characterized by the use of the lattice-theoretic approach to capture the monotonic properties of Markovian equilibria. The topics covered are: (i) a general framework for discounted stochastic games with Liptchitz-continuous and monotone equilibrium strategies and values, (ii) a model of capital accumulation, (iii) two classes of games with perfect information, in strategic bequests and oligopoly with commitment. In view of the restriction to pure-strategy equilibria and of the natural monotonicity property of strategies and value functions in most economic applications, this approach appears most promising.

This paper deals with a general version of a two-stage model of R&D and product market competition. We provide a thorough generalization of previous results on the comparative performance of noncooperative and cooperative R&D, dispensing in particular with ex-post firm symmetry and linear demand assumptions. We also characterize the structure of profit-maximizing R&D cartels where firms competing in a product market jointly decide R&D expenditure, as well as internal spillover, levels. We establish the firms would essentially always prefer extremal spillovers, and within the context of a standard specification, derive conditions for the optimality of minimal spillover.

In the framework of symmetric Cournot oligopoly, this paper provides two minimal sets of assumptions on the demand and cost functions that imply respectively that, as the number of firms increases, the minimal and maximal equilibria lead to (i) decreasing industry price and increasing or decreasing per-firm output; and (ii) increasing industry price (and decreasing per-firm output). In both cases, per-firm profits are decreasing. The analysis relies crucially on lattice-theoretic methods and yields general, unambiguous and easily interpretable conclusions of a global nature. As a byproduct of independent interest, new insight into existence of Cournot equilibrium is developed.

\Ve consider a discounter stochastic game of common-property capital accumulation with nonsymetric players. bounded Due-period extraction capacities, and a transition law satisfying a general strong convexity condition. We show that the infinite-horizon problem has a Markov-stationary (subgame-perfect) equilibrium and that every finite horizon transaction has a unique Markovian equilibrium, hoth in consumption functions which are continuous, non decreasing and have all slopes bounded above by 1. Unlike previous results in strategic dynamic models, these properties are reminiscent of the corresponding optimal growth model.