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This study proposes a quote-driven predictive automated market maker (AMM) platform with on-chain custody and settlement functions, alongside off-chain predictive reinforcement learning capabilities, to improve the liquidity provision of real-world AMMs. The proposed architecture augments Uniswap V3, a cryptocurrency AMM protocol, by using a novel market equilibrium pricing to reduce divergence and slippage losses. Furthermore, the proposed architecture involves a predictive AMM capability, for which a deep hybrid long short-term memory (LSTM) and Q-learning reinforcement learning framework is used. It seeks to improve market efficiency through obtaining more accurate forecasts of liquidity concentration ranges, where liquidity starts moving to expected concentration ranges prior to asset price movement; thus, liquidity utilization is improved. The augmented protocol framework is expected to have practical real-world implications through (1) reducing divergence loss for liquidity providers; (2) reducing slippage for crypto-asset traders; and (3) improving capital efficiency for liquidity provision for the AMM protocol. The proposed architecture is empirically benchmarked against the well-established Uniswap V3 AMM architecture. The preliminary findings indicate that the novel AMM framework offers enhanced capital efficiency, reduced divergence loss, and diminished slippage, which could potentially address several of the challenges inherent to AMMs. [ABSTRACT FROM AUTHOR]

This manuscript contains several new spaces as the generalizations of fuzzy triple controlled metric space, fuzzy controlled hexagonal metric space, fuzzy pentagonal controlled metric space and intuitionistic fuzzy double controlled metric space. We prove the Banach fixed point theorem in the context of intuitionistic fuzzy pentagonal controlled metric space, which generalizes the previous ones in the existing literature. Further, we provide several non-trivial examples to support the main results. The capacity of intuitionistic fuzzy pentagonal controlled metric spaces to model hesitation, capture dual information, handle imperfect information, and provide a more nuanced representation of uncertainty makes them important in dynamic market equilibrium. In the context of changing market dynamics, these aspects contribute to a more realistic and flexible modelling approach. We present an application to dynamic market equilibrium and solve a boundary value problem for a satellite web coupling. [ABSTRACT FROM AUTHOR]

We investigate the firms' and unions' incentives to engage in socially responsibility activities in a unionized differentiated goods' duopoly market. The socially responsible attributes attached to products are considered as credence goods, with consumers forming expectations about their existence and level. We show that a Corporate Social Responsibility (CSR) bargaining scheme, in which firms and unions bargain over not only the wage rate but also the level of the firms' CSR activities, always arises in equilibrium. Incorporating CSR activities into the union–firm bargaining agenda acts as a commitment device that credibly signals to consumers the level of CSR activities undertaken by firms. The market equilibrium leads to the highest social welfare; thus, market and societal incentives are aligned. [ABSTRACT FROM AUTHOR]

This paper contributes to the literature that postulates a relationship between income inequality and the relative importance of "market" and "organization" in the direction of resources. The paper emphasizes that both are endogenous; therefore, the empirical associations observed in the empirical data between inequality measures and production organization variables cannot be interpreted as indicative of causal relationships. The paper solves for the composition and size of occupational groups, the distribution of firm size, and the distribution of income as market equilibrium outcomes of an occupational choice economy, and performs a comparative static analysis. We find that the interaction between cross‐economy differences in the distribution of general skills in the labor force and the loss of control in the supervision of workers by managers can explain the empirical regularities observed in the relationship between the organization of production (distribution of firm size) and income inequality (distribution of labor income). This explanation of the empirical regularities differs from others proposed in the literature, such as those based on institutional constraints or the market power of firms. [ABSTRACT FROM AUTHOR]

This study contributes to the discussion about a fair and balanced pension system with a collectively funded pension scheme or social security and a defined contribution pillar. With an invigorated risk approach using financial option positions, it considers the variance of socioeconomic interests of different society-earning cohorts. By that, it enables the assumption of un-uniformity in interests about the fair and sustainable pension design. Specifically, we claim that the alternative cost of hedging the ideal position to the counterparty position studies the implied risks and returns that participants are willing to absorb and hence may lead to a fair compromise when there are different interests. The novelty of the introduced method is mainly based on the variety of participants' risks and not on the utility function. Accordingly, we spare the discussion about the right shape of the utility function and the proper calibrations. [ABSTRACT FROM AUTHOR]

It is well known that, for a specific tax, its economic incidence does not depend on which side of the market has the legal obligation to pay the tax. In this paper, we show that, for an ad valorem tax, this legal incidence does matter for the economic incidence. In particular, when a government imposes an ad valorem tax rate on the sale of a commodity, the resulting reduction in the market equilibrium level of sales will be larger when sellers are obliged to pay the tax than when buyers are obliged to pay the tax. [ABSTRACT FROM AUTHOR]

Despite recent calls for increased taxation of firearms, there has been little quantification of the impact that this would have on the market. Using tax receipts and recent estimates of supply and demand elasticities, this paper measures the size of the U.S. gun market at equilibrium, and the effects of current and higher tax rates. Baseline estimates indicate that market equilibrium is $14.11 billion and current taxes reduce sales by 14.5 percent. Taxing firearms at rates comparable to taxes on alcohol would cut sales to roughly three-quarters of equilibrium and increase tax revenue by 58 percent; raising gun taxes to the rate on tobacco would reduce sales to about half of the equilibrium level and double federal tax revenue. [ABSTRACT FROM AUTHOR]

We examine the fractal volatility and long‐range dependence of Bitcoin, Ethereum, Tether and USD Coin by employing the continuous wavelet transform, maximal overlap discrete wavelet transform and rescaled range. Our dataset consists of daily prices spanning from January 2017 through to October 2022, encapsulating pre‐ and post‐epidemic eras. Generally, our findings suggest that Tether presents the least overall volatility throughout the time‐frequency spectrum. USD Coin demonstrates ephemeral turbulence, contrary to Tether's maturity in influencing market equilibrium through token issuance and trade responses. In the post‐epidemic sample, both stablecoins indicate mean reversion, with USD Coin showing marginally better efficiency. Conversely, investment tokens display persistent clusters due to retail traders and long‐term fundamental institutions. Although both tokens illustrate multifractal volatility, Ethereum unveils more essence of self‐similarity than Bitcoin. Hence, there is no evidence that Ethereum truly duplicates Bitcoin since policy‐related events differ between them, as both return series move incongruously. Conditional dynamics signify that all cryptocurrencies, except Tether, were affected by the pandemic transition of COVID‐19 and subsequent macroeconomic news. The unconditional volatility of stablecoins evinces zero‐mean errors, antithetical to investment tokens exhibiting annual cycles. The fractal geometry suggests that investment tokens simulate one‐dimensional lines, whereas stablecoins mimic two‐dimensional planes. [ABSTRACT FROM AUTHOR]

In this article, the authors analyze data accumulated over 10+ years of teaching market interaction using a simple classroom experiment. The experiment is designed to teach first-year undergraduate students the basics of supply and demand and market efficiency. In total, they analyze data from 85 teaching sessions and 243 individual markets. They find that traded prices typically (90% of the time) move in accordance with market equilibrium comparative statics. They also find that average traded prices are rarely (5% of the time) consistent with market equilibrium but typically (70% of the time) "close" to the equilibrium. The traded quantity is often (60% of the time) more than equilibrium, which results in a loss of efficiency. The law of one price is strongly rejected. [ABSTRACT FROM AUTHOR]

Large-scale, two-sided matching platforms must find market outcomes that align with user preferences while simultaneously learning these preferences from data. Classical notions of stability (Gale and Shapley, 1962; Shapley and Shubik, 1971) are, unfortunately, of limited value in the learning setting, given that preferences are inherently uncertain and destabilizing while they are being learned. To bridge this gap, we develop a framework and algorithms for learning stable market outcomes under uncertainty. Our primary setting is matching with transferable utilities, where the platform both matches agents and sets monetary transfers between them. We design an incentive-aware learning objective that captures the distance of a market outcome from equilibrium. Using this objective, we analyze the complexity of learning as a function of preference structure, casting learning as a stochastic multi-armed bandit problem. Algorithmically, we show that “optimism in the face of uncertainty,” the principle underlying many bandit algorithms, applies to a primal-dual formulation of matching with transfers and leads to near-optimal regret bounds. Our work takes a first step toward elucidating when and how stable matchings arise in large, data-driven marketplaces. [ABSTRACT FROM AUTHOR]

In this paper we study a non-cooperative sequential equilibrium concept, namely the Stackelberg–Nash equilibrium, in a game in which heterogeneous atomic traders interact in interrelated markets. To this end, we consider a two-stage quantity setting strategic market game with a finite number of traders. Within this framework, we define a Stackelberg–Nash equilibrium. Then, we show existence and local uniqueness of a Stackelberg–Nash equilibrium with trade. To this end, we use a differentiable approach: the vector mapping which determines the strategies of followers is a smooth local diffeomorphism, and the set of Stackelberg–Nash equilibria with trade is discrete, i.e., the interior equilibria of the game are locally unique. We also compare through examples the sequential and the simultaneous moves games. A striking difference is that exchange can take place in one subgame while autarky can hold in another subgame, in which case only leaders (followers) make trade. [ABSTRACT FROM AUTHOR]

This work theoretically finds out the welfare implications of different reformatory policies in a small open developing economy using a 2 × 2 full-employment general equilibrium model with distorted factor and product markets. We have found that there exists a trade-off between labour market and credit market reforms, and that there might exist certain critical levels beyond which the implementation of the policies might produce perverse effects on social welfare. Even though our results are interesting and have important policy bearings, their applications in reality in a large democratic country like India, may not be practicable because of political economy reason. [ABSTRACT FROM AUTHOR]

In this paper, we construct a market equilibrium model to explain why firms repurchase their shares, the popularity of share repurchases compared to dividends, and the preference of share repurchases by institutions and corporate investors despite their tax disadvantage to corporate investors. Share repurchases help shareholders diversify their portfolios, provide firms with flexibility in distributing cash to their shareholders, help institutions and corporate investors take controlling positions in firms, and lead to a rise in share price, benefiting both selling and not selling shareholders through a rise in share price and firms through a low cost of capital. [ABSTRACT FROM AUTHOR]

In the study we explore an oligopoly market for equilibrium and stability based on statistical data with the help of response functions rather than payoff maximization. To achieve this, we extend the concept of coupled fixed points to triple fixed points. We propose a new model that leads to generalized triple fixed points. We present a possible application of the generalized tripled fixed point model to the study of market equilibrium in an oligopolistic market dominated by three major competitors. The task of maximizing the payout functions of the three players is modified by the concept of generalized tripled fixed points of response functions. The presented model for generalized tripled fixed points of response functions is equivalent to Cournot payoff maximization, provided that the market price function and the three players' cost functions are differentiable. Furthermore, we demonstrate that the contractive condition corresponds to the second-order constraints in payoff maximization. Moreover, the model under consideration is stable in the sense that it ensures the stability of the consecutive production process, as opposed to the payoff maximization model with which the market equilibrium may not be stable. A possible gap in the applications of the classical technique for maximization of the payoff functions is that the price function in the market may not be known, and any approximation of it may lead to the solution of a task different from the one generated by the market. We use empirical data from Bulgaria's beer market to illustrate the created model. The statistical data gives fair information on how the players react without knowing the price function, their cost function, or their aims towards a specific market. We present two models based on the real data and their approximations, respectively. The two models, although different, show similar behavior in terms of time and the stability of the market equilibrium. Thus, the notion of response functions and tripled fixed points seems to present a justified way of modeling market processes in oligopoly markets when searching whether the market has reached equilibrium and if this equilibrium is unique and stable in time [ABSTRACT FROM AUTHOR]

We present an equilibrium model with inter-linked frictional labour and marriage markets. Women's flow value of being single is treated as given, and it captures returns from employment. Men can undertake a costly ex-ante investment in schooling. In the marriage market, women search sequentially for men characterised by wages, so they use a reservation value strategy. Single unemployed men conduct marital sequential search and, with an eye on the marriage market, also conduct a so-called constrained sequential job search. Given this setup, schooling enhances men's marriage prospects as well as their labour market returns. In turn, women's behaviour affects men's schooling investment decision and their optimal job search strategy. We establish that for any given set of parameters, there exists a unique market equilibrium where a fraction of men get educated, and show that this fraction decreases if women's labour market returns increase. We also examine the robustness of such an equilibrium. [ABSTRACT FROM AUTHOR]

In this paper, we focus on a dynamic Cournot game in the market with a nonlinear (isoelastic) demand function. In our model, there are N competing firms featured by nonlinear cost functions, which enhances our model's resemblance to real-world scenarios. Firstly, we focus on the homogeneous case where firms' marginal costs change at equal rates. We establish analytical expressions of the market supply at equilibrium and perform comparative static analysis. In addition, we investigate the local stability under different economies of scale and show that there could be multiple stable equilibria if firms face economies of scale. The heterogeneous case where firms' marginal costs change at distinct rates is much more complex, thus we investigate the duopoly game with only two firms involved. Methods of symbolic computations such as triangular decomposition and partial cylindrical algebraic decomposition are employed in the analytical investigations of the equilibrium, which is nearly impossible by using the pencil-and-paper approach since the closed-form equilibrium is quite complicated. According to the computational results, we derive that two stable positive equilibria may coexist if both firms face economies of scale. Additionally, we conduct preliminary numerical simulations and find two different types of complex dynamics of the model considered in this paper: complex trajectories such as periodic and chaotic orbits may appear; the topological structure of the basins of attraction may be complex. [ABSTRACT FROM AUTHOR]

Under the current power trading model, especially in the context of the large-scale penetration of renewable energy and the rapid integration of renewable energy into the power system, reasonable medium- and long-term decomposition can reduce the fluctuation in the energy price when the integrated energy service provider (IESP) participates in the spot market. It helps to avoid the price risk of the spot market. Additionally, it promotes the optimization of the operation of the regional energy day-ahead scheduling. At the present stage, most of the medium- and long-term contract decomposition methods focus on the decomposition of a single power and take less consideration of the bidding space in the spot market. This limitation makes it challenging to achieve efficient interaction and interconnection among multi-energy resources and smooth integration between the medium- and long-term market and the spot market. To address these issues, this paper proposes an optimal monthly contract decomposition method for IESPs that takes into account the equilibrium of spot bidding. First, the linking process and rolling framework of multi-energy transactions between the medium- and long-term market and the spot market are designed. Second, an optimal decomposition model for monthly contracts is constructed, and a daily decomposition method for monthly medium- and long-term contracts that accounts for the spot bidding equilibrium is proposed. Then, the daily preliminary decomposition result of medium- and long-term multi-energy contracts is used as the boundary condition of the day-ahead scheduling model, and the coupling characteristics of the multi-energy networks of electricity, gas, and heat are taken into account, as well as the operational characteristics. Then, considering the coupling characteristics and operating characteristics of electricity, gas, and heat networks, the optimal scheduling model of a multi-energy network is constructed to minimize the sum of cumulative daily operating costs, and the monthly final contract decomposition value and daily spot bidding space are derived. Finally, examples are calculated to verify the validity of the decomposition model, and the examples show that the proposed method can reduce the variance in spot energy purchase by about 4.64%, and, at the same time, reduce the cost of contract decomposition by about USD 0.33 million. [ABSTRACT FROM AUTHOR]

In the era of the rapid development of e-commerce, many retailers choose to launch promotional activities to become consumers' first choice for shopping. Since price discounts can greatly attract consumers, the e-commerce platforms have also begun to implement discount pricing. It is urgent for e-commerce platforms and retailers to formulate reasonable discount strategies to achieve sustainable business. In this paper, we construct a dynamic game model for implementing discount pricing on an e-commerce platform and two retailers, we study the market equilibrium between the two retailers and the e-commerce platform under various scenarios that considering consumers' strategic waiting behavior and competition between the two retailers, we further discuss the effectiveness of retailer discount pricing and the double discount pricing of the platform and retailers. We show that the optimal pricing decreases as the difference in product quality narrows under both pricing strategies. Low-quality retailers implementing a double discount pricing strategy are in relatively higher demand only when the difference in product quality is small. High-quality retailers implementing the retailer discount pricing strategy are in relatively higher demand only when the product quality difference is large. Double discount pricing is desirable for both e-commerce platforms and retailers and can be used to effectively achieve Pareto improvement in the market by increasing their expected profit. Our results emphasize the role of product quality and the value of the double discount pricing strategy. The double discount pricing strategy weakens the profit advantage that retailers and platforms gain from it as the rebate intensity and rebate redemption rates increase. [ABSTRACT FROM AUTHOR]

A Systemic Optimal Risk Transfer Equilibrium (SORTE) was introduced in: "Systemic optimal risk transfer equilibrium", Mathematics and Financial Economics (2021), for the analysis of the equilibrium among financial institutions or in insurance-reinsurance markets. A SORTE conjugates the classical Bühlmann's notion of a risk exchange equilibrium with a capital allocation principle based on systemic expected utility optimization. In this paper we extend such a notion to the case when the value function to be optimized is multivariate in a general sense, and it is not simply given by the sum of univariate utility functions. This takes into account the fact that preferences of single agents might depend on the actions of other participants in the game. Technically, the extension of SORTE to the new setup requires developing a theory for multivariate utility functions and selecting at the same time a suitable framework for the duality theory. Conceptually, this more general framework allows us to introduce and study a Nash Equilibrium property of the optimizer. We prove existence, uniqueness, and the Nash Equilibrium property of the newly defined Multivariate Systemic Optimal Risk Transfer Equilibrium. [ABSTRACT FROM AUTHOR]

Typically, governments subcontract the operation of urban bus systems to several bus operators. In particular, the government aims to promote the service quality for passengers by introducing competition among bus operators and subsidizes bus operations to ensure affordable fares. However, most existing studies about subsidy allocation typically do not account for the competitive factors among bus operators and thus may underestimate the associated benefits. In this study, we investigate how the government allocates subsidies to minimize social costs, taking into account the competition among bus operators and passenger route decisions. We describe this problem as a trilevel optimization model and use a game-theoretic approach to characterize the market equilibrium of bus operators. Next, we transform the trilevel model into a mixed-integer programming problem with quadratic constraints and solve it using an exact algorithm with acceleration techniques. The results of numerical experiments demonstrate the computational efficiency of the proposed algorithm. Several valuable insights are derived: First, lines served by competing bus operators typically do not require subsidies. Second, competitive behavior decreases social costs (including bus operating costs and passenger travel costs) more effectively in cities in which the passengers assign higher value to time. Third, the competitive behavior may be guided by exogenous parameters, such as ticket prices, to approximate the optimum of urban bus systems. Funding: This work was supported by the Key Project [Grant 52131203], Youth Program [Grant 72301065], and Project of International Cooperation and Exchanges [Grant 72361137006] of the National Natural Science Foundation of China. [ABSTRACT FROM AUTHOR]

Entry in a homogeneous Cournot‐oligopoly is excessive if there is business‐stealing. These findings assume that production costs reduce profits and welfare equally. If firms pay informational rents due to frictions in the employer–employee relationship, production costs partly reflect transfers, which do not alter welfare directly. We investigate the excessive entry theorem in the presence of rents. We find that informational rents can invalidate the theorem. Rents reduce profits and deter entry into the market equilibrium, while the socially optimal number of firms is not affected directly. The rent effect becomes stronger the lower the number of firms and can overcompensate the business‐stealing externality. As an example, we model a hidden action problem in which employees have an informational advantage after signing the contract with the firm. Insufficient entry occurs if entry costs are sufficiently high because they lower the number of firms and raise informational rents. [ABSTRACT FROM AUTHOR]

We study linear Fisher markets with satiation. In these markets, sellers have earning limits, and buyers have utility limits. Beyond applications in economics, they arise in the context of maximizing Nash social welfare when allocating indivisible items to agents. In contrast to markets with either earning or utility limits, markets with both limits have not been studied before. They turn out to have fundamentally different properties. In general, the existence of competitive equilibria is not guaranteed. We identify a natural property of markets (termed money clearing) that implies existence. We show that the set of equilibria is not always convex, answering a question posed in the literature. We design an FPTAS to compute an approximate equilibrium and prove that the problem of computing an exact equilibrium lies in the complexity class continuous local search (CLS ; i.e., the intersection of polynomial local search (PLS) and polynomial parity arguments on directed graphs (PPAD)). For a constant number of buyers or goods, we give a polynomial-time algorithm to compute an exact equilibrium. We show how (approximate) equilibria can be rounded and provide the first constant-factor approximation algorithm (with a factor of 2.404) for maximizing Nash social welfare when agents have capped linear (also known as budget-additive) valuations. Finally, we significantly improve the approximation hardness for additive valuations to 8/7>1.069. Funding: J. Garg was supported by the National Science Foundation [Grant CCF-1942321 (CAREER)]. M. Hoefer was supported by Deutsche Forschungsgemeinschaft [Grants Ho 3831/5-1, Ho 3831/6-1, and Ho 3831/7-1]. [ABSTRACT FROM AUTHOR]

About 40% of workers find their jobs through referrals. We distinguish between two types of referrals based on whether the referrer works at the hiring firm (internal referrals) or not (external referrals). Interestingly, jobs found through internal (external) referrals pay more (less) than those found through formal methods. An equilibrium labor market model is then built by introducing an incentive‐compatible mechanism through which workers can share job opening information. A nondegenerate wage distribution arises in equilibrium with a wage premium (penalty) for internal (external) referrals. When calibrated, our model can capture these salient features of the U.S. labor market. [ABSTRACT FROM AUTHOR]

Risk Sensitivity and Firm Power: Price Competition with Mean2-Variance Profit Objective Under Multinomial Logit Demand Firms with varying degrees of risk sensitivity perceive the same stochastic profit prospect differently. It is important to understand the equilibrium pricing behaviors under risk aversion and their implications on firms' survival and market health. The authors identify a power index, which is the ratio of product attractiveness to risk sensitivity, and show that the set of profitable firms is power index ordered. Firms with a favorable power index value earn a positive profit in a price competition, and others are driven to zero profit. Interestingly, although high risk aversion handicaps a firm, this paper shows that moderate risk aversion may give a firm an advantage over an otherwise equivalent competitor that is less risk sensitive. The authors also establish that in an equilibrium with market entry and exit, the power index is generalized to the ratio of product attractiveness and an entry cost-adjusted risk sensitivity measure. This paper is the first in the literature to address a risk-sensitive price competition under the multinomial logit choice model, with each participating firm maximizing a risk-adjusted profit objective. We find that, at equilibrium, a subset of firms earns a positive profit, whereas others are driven to zero profit, contrasting with the risk-neutral equilibrium in which all firms earn a positive profit regardless of quality and cost. We identify a power index—the ratio of effective product attractiveness to risk sensitivity—and show that the set of profitable firms is power index ordered. Risk aversion drives firms toward a more aggressive equilibrium pricing strategy and intensifies competition. However, the relative profit impact across firms is not monotone; although high risk aversion handicaps a firm, moderate risk aversion may place a firm at an advantage over an otherwise equivalent competitor that is less risk sensitive, contrary to intuition. In an equilibrium with market entry cost, we show that the set of active firms at equilibrium follows a generalized power index order that depends on entry cost. Furthermore, although the power index is decreasing in risk aversion, the generalized power index may initially be increasing in risk aversion. Supplemental Material: The online appendix is available at https://doi.org/10.1287/opre.2023.2466. [ABSTRACT FROM AUTHOR]

With the increasing prevalence of renewable energy (RE) companies equipped with private energy storage (ES) systems, a dual capability emerges to offer strategic pricing and strategic constraints in market competition. Specifically, these RE companies can strategically leverage their own private ESs to modulate the variability of RE output limits and introduce modified constraints within the market. To examine these new strategic behaviors and the resulting market equilibria, we introduce an innovative bilevel strategic behavior model. The upper level of the model delineates the strategy for RE profit maximization through the imposition of strategic constraints and pricing schemes, while the lower level calculates the revenue outcomes for all entities in the day-ahead energy market clearing. The integration of the bilevel models from all strategic entities leads to the formulation of a new equilibrium problem with equilibrium constraints (EPEC), the solution of which indicates a novel market equilibrium. The impacts of these market equilibria on critical system operation metrics are then evaluated across two representative market mechanisms. Our numerical experiments reveal that RE exhibits low sensitivity to the private ES's cost, suggesting that the behavior of imposing strategic constraints may be widespread among RE companies owning private ESs. Furthermore, the introduction of strategic constraints enhances the competitiveness of RE, significantly affecting social welfare, energy pricing, and RE integration rate. The study concludes with insights that could inform practical market transactions and system operations. [ABSTRACT FROM AUTHOR]

The paper develops a theoretic equilibrium model for ridesplitting markets with specific considerations of origin-destination demand patterns, competition with other transport modes, characteristics of en route matching, and spatial allocation of ridesplitting vehicles, to adequately portray the intertwined relationships between the endogenous variables and decisions. The operation property of the market under distance-based unified pricing is analyzed through the response of system performance indicators to the decisions. Moreover, a gradient descent algorithm is derived to find optimal operating strategies in the monopoly scenario and social optimum scenario. Leveraging the tight connection between trip's utility and level of service (LoS), the paper then proposes a utility-based compensation pricing method to alleviate the inequity issue in ridesplitting, which results from the variance in waiting time and detour time and the implementation of unified pricing. Specifically, the trip fare of those with an initial utility smaller than a threshold will be compensated following a predefined compensation function. We compare its effectiveness and influence in different scenarios through numerical experiments at Munich. The results show that the proposed pricing method can improve the LoS and equity without losing any profit and welfare, and can even achieve increments in maximum profit and social welfare under certain conditions. [ABSTRACT FROM AUTHOR]

Do gender diversity quotas enhance firm value? This broad question has sparked significant debate because, whereas diversity is generally thought to improve board functioning, prior research in international settings suggests mandating diversity may have adverse consequences if it moves firms away from market equilibrium. Exploiting the political events leading up to the passage of California Senate Bill (SB) 826 as an exogenous shock to assess the market implications of board gender composition, we document either significantly positive or insignificant two-day abnormal returns for California firms across a variety of model specifications. Importantly, this finding contradicts the strong claims of contemporary studies of SB 826 that the California mandate was value-destructive. We reconcile these findings by providing critical evidence that contemporaneous results lack robustness to alternative model specifications and provide an incomplete picture by failing to comprehensively examine a broader set of event dates or account for mixed messaging on the final event date. We also provide some evidence of significant negative abnormal returns to litigation milestones that threaten to overturn SB 826 with the magnitude increasing in the size of board gender deficits. Finally, we provide evidence that there is no observable decline in newly appointed female director quality following the implementation of SB 826 relative to either preregulation or male director appointments. Collectively, our results suggest nonnegative (if not positive) consequences to California firms arising from SB 826 and directly counter assertions that mandated gender diversity is detrimental to firm value. This paper was accepted by Brian Bushee, accounting. Funding: The authors gratefully acknowledge research funding from Brigham Young University and the University of Toronto. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4825. [ABSTRACT FROM AUTHOR]

I model positive sorting of entrepreneurs across the high and low value‐added segments of the venture capital market. Aiming to attract high‐quality entrepreneurs, inefficiently many venture capitalists (VCs) commit to provide high value‐added by forming small portfolios. This draws the marginal entrepreneur away from the low value‐added segment, reducing match quality in the high value‐added segment too. There is underinvestment. Multiple equilibria may emerge, and they differ in aggregate investment. The model rationalizes evidence on VC returns and value‐added along fundraising "waves" and when the cost of entrepreneurship falls, and generates untested predictions on the size and value‐added of venture capital. [ABSTRACT FROM AUTHOR]

Will stock exchanges innovate to address latency arbitrage and the arms race for speed? This paper models how exchanges compete in the modern electronic era and how this shapes incentives for market-design innovation. In the status quo, exchange trading fees are competitive, but exchanges earn economic rents from selling speed. These rents create a wedge between private and social incentives to innovate and support the persistence of an inefficient market design in equilibrium of a market-design adoption game. We discuss implications for policy and insights for the literatures on market design, innovation, and platforms. [ABSTRACT FROM AUTHOR]

This paper presents a model that explores the strategic bidding equilibrium within a microgrid and its interactions with other strategic and non-strategic rivals in a joint energy and balancing market. The model utilizes a tri-level mathematical program with equilibrium constraints (MPEC) to represent the behavior of each strategic producer. Upper level maximizes the profit of each strategic producer, including microgrid and another strategic rival. The first lower-level problem involves maximizing social welfare through the day-ahead market clearing process, while the second lower-level problem deals with the balancing market clearing process. These objectives form the core of the proposed model. To simplify the tri-level problem, duality theory and the Karush-Kuhn-Tucker (KKT) optimally conditions are employed to transform it into a mixed integer linear programming (MILP) problem. By simultaneously solving all MPECs, an equilibrium problem with equilibrium constraints (EPEC) is formulated. The resulting EPEC is then addressed using a diagonalization algorithm and game theory to obtain a market Nash equilibrium, which constitutes the secondary objective of this paper. The effectiveness of the model is evaluated using the 6-bus test system as a case study. The results indicate that, at the equilibrium point, both the microgrid and rivals experience reduced profits compared to the initial state.

This article examines the uncertainties arising from agent interactions in interregional resource-intensive markets, particularly those prevalent in northern regions, and explores factors undermining their effectiveness Given these circumstances, the study aims to establish an optimal balance of interests between external and internal beneficiaries by taking into account interests, as well as reducing transaction uncertainty by considering their interests and mitigating transaction uncertainty through the optimization of market regulators in the context of interregional resource-intensive markets typical of northern regions. The analysis reveals that the condition of a single market equilibrium is compromised due to the influence of exogenous factors and the endogenous formation of institutional mechanisms that coordinate agent actions amid uncertain collaborations. Contrary to the neoclassical approach, which focuses on competitive pricing without altering the market structure, an alternative perspective posits that spatial externalities induce endogenous mechanisms characteristic of Chamberlin-type market structures. The study expands the understanding of uncertainty causes within the theory of incomplete contracts, incorporating social system costs into transaction costs in line with the neo-institutional concept. This conceptual framework enables the exploration of spatial entities as meso-economic systems, with a specific emphasis on the organizational and geographical characteristics of northern territories. The research evaluates four institutional zones governing economic management practices in northern regions. Through competence enhancement and optimization of market regulator design, the study demonstrates the feasibility of achieving a balance of interests between external and internal beneficiaries by strengthening institutional capital, thereby reducing social system costs. The proposed system of organizational and institutional measures enhances local institutional practices within the existing institutional matrix without violating antimonopoly legislation, as its focus is on restoring competitive conditions and reducing the costs of operating the social system.

Under the “carbon peak and carbon neutrality” background, clean energy enters the market on a large scale, so it is very important to study the pricing theory of electricity. The bright spot of this paper is that the load curve is more practical. In the original version of electricity pricing theory based on continuous time commodity model, the load curve is supposed to be a monotonic function with time for simplicity of derivation, which is not realistic. To overcome this defect, load curves are supposed to be in shapes of a unimodal model and multimodal cases in this paper, which are more in conformity with the actual load curve in real-world power markets. Two study cases are used to demonstrate the rationality of the proposed models. These results together with the authors' previous work provide a complete pricing scheme for continuous-time electricity commodity model.

The main objective of the paper is to analyze how policymakers influence the random oligopolistic market equilibrium problem. To this purpose, random optimal control equilibrium conditions are introduced. Since the random optimal regulatory tax is characterized by a stochastic inverse variational inequality, existence and well-posedness results on such an inequality are proved. At last a numerical example is discussed. [ABSTRACT FROM AUTHOR]

We develop an empirical model of the market for mobile services in the USA based on providers' response functions. Guided by a duopoly model, we obtain our empirical response functions from an approximation of quarterly response data on smartphone subscriptions by sigmoid functions of time. The robustness analysis suggests that our model fits the data well and outperforms the regression model. Further, we demonstrate that our empirical response functions satisfy the conditions for semi-cyclic contractions which guarantee the existence, uniqueness and stability of long-run equilibrium. [ABSTRACT FROM AUTHOR]

Long‐distance commuting (LDC) is an increasingly relevant strategy of labor mobility worldwide and is therefore key to understanding the structure and dynamics of labor markets. However, little is known about the effect that LDC has on the labor market equilibrium of host territories. This paper addresses this gap for the case of Chile. While LDC is a useful strategy for improving salary and employment on a national scale, our results show a negative effect for residents in host territories (on a local scale), particularly when LDC results in commuters with similar characteristics to residents competing for the same jobs. [ABSTRACT FROM AUTHOR]

This article argues that Croatia's growth over the past two decades is deeply related to the dynamics of international trade. Under the premise that what is bought and sold in global markets reflects the economy's fundamentals, we show that the rate of growth compatible with equilibrium in the balance-of-payments, i.e. the dynamic Harrod trade multiplier, is a good predictor of the country's actual long-run growth rate. For this purpose, we apply a state–space model and the Kalman smoother to obtain time-varying parameter estimates of the exports and imports functions. We use these estimates to investigate the determinants of international non-price competitiveness. Bayesian Model Averaging (BMA) and Weighted Average Least Squares (WALS) techniques are combined to tackle model selection uncertainty. It is shown that R&D investments and human capital accumulation are the most important explanatory variables. The success of the European Union's (EU) integration process depends on the capacity of its new members to achieve a balanced-growth path. Being the last country to join the union, the experience of this single country is particularly relevant to understand possible development alternatives for the region. We conclude by highlighting the policy relevance of our findings to the evaluation of Croatia's catching-up performance as part of the EU. • Croatia's growth is deeply related to the dynamics of international trade. • We apply a state–space model to estimate the trade-multiplier for this country. • We show it is a good predictor of the actual long-run growth rate. • Estimates are used to investigate the determinants of international non-price competitiveness. • R&D, human capital, and demography are the most important explanatory variables. [ABSTRACT FROM AUTHOR]

A price competition amongst two centralized dual-channel supply chains (DCSCs) has been investigated in this study. Three scenarios of competition are studied—a simultaneous move game and two sequential games (one in which the first supply chain is the leader and the second supply chain is the follower, and vice versa). The optimal prices and profits for these scenarios have been derived and compared. It is observed that prices and profits are higher under Stackelberg (Sequential move) competition as compared to Simultaneous move competition. Finally, the present study determines which type of competition structure would persist in the market by using a Wait or Declare two-strategy game. The game depicts the market entry decision of the competing supply chains. The results reveal that self interest in competing dual-channel supply chains leads to a sequential move competition and consequently to higher product prices. To reduce the price and thus induce a customer favourable equilibrium, regulatory authorities like the government can step in and provide incentives. We derive a lower bound on the incentive which would implement a low market price equilibrium in Dominant Strategies. Further, we note that under competition, dual-channel supply chains outperform traditional supply chains only upto a certain threshold of the retail channel market share and we derive an expression for the same threshold. This threshold is found to be independent of the nature of the product. [ABSTRACT FROM AUTHOR]

Auction-based parking mechanisms (ABPM) have been recognized as promising solutions to the parking problem. As the operator of the ABPM, the parking platform should not only be well-operated to provide parking services for demanders in need but also maintain commercial viability for sustainable operations. Motivated by this, we propose three ABPMs, namely, the ABPM without withdrawal right, the ABPM with costless withdrawal right, and the ABPM with non-free withdrawal right. Particularly, we characterize the parking demanders' withdrawal behaviors in the ABPMs. This behavior is motivated by the demanders' negative utilities derived from the auction sequence, where the demanders will first submit bid prices and are then allowed to withdraw from the parking market after the announcement of auction results when they are aware of their true valuations. We derive the equilibrium bidding strategies and the platform's expected revenues under the above three mechanisms and compare them in terms of the analytical results. It has been found that the introduction of withdrawal right will stimulate demanders to raise their bids for winning and the ABPM with non-free withdrawal right generates the highest revenue under certain conditions. A case study of parking in Beijing Financial Street has been conducted to illustrate the findings and explore managerial implications, including adapting the ABPM with non-free withdrawal right, narrowing the parking supply-demand gap, and enhancing travel experiences on the way to parking. • Parking demanders' endogenous withdrawal behaviors are modeled in the auction-based parking mechanism (ABPM). • Three ABPMs regarding the usage of withdrawal right are designed and compared under the market equilibrium framework. • The withdrawal right stimulates parking demanders to raise bids for winning. • The ABPM with non-free withdrawal right generates the highest revenue under certain conditions. • Managerial implications regarding boosting the parking platform's revenue are proposed. [ABSTRACT FROM AUTHOR]

To bolster their competitiveness and profitability, prominent e-commerce platforms have embraced dual retailing channels: self-operating channels and online marketplaces. However, a discernible trend is emerging wherein e-commerce platforms are expanding their marketplaces to encompass competitive third-party suppliers. Motivated by this trend, this study sought to examine the strategic integration of a third-party product amidst the competition between a self-operating channel and a marketplace. This investigation involved the development of a game-theoretic model involving a platform and two representative suppliers—an incumbent supplier and a new entrant. Specifically, we delved into establishing an equilibrium partnership between the platform and the new entrant supplier while also evaluating the self-operating strategy of the established supplier. Our analysis uncovered a counterintuitive outcome: an escalation in the commission rate resulted in diminished profits for the established supplier. Furthermore, we ascertained that the economic implications of a competitive product entry pivot significantly on product quality. Lastly, we demonstrated that the revenue-sharing rate plays a pivotal role in influencing the self-operating strategy of the established supplier, and the market equilibrium hinges on the interplay among product quality, the commission rate, and the revenue-sharing rate. These insights provide invaluable guidance for marketers and e-commerce platforms in their strategic decision-making processes. [ABSTRACT FROM AUTHOR]

In this paper, we develop a novel asset pricing model in which data factor is incorporated into the fundamental value to explore its impact on financial market equilibrium. It is shown that high precision of data can attenuate the fundamental risk and increase the trading intensity, thus enhancing price informativeness and liquidity along with reducing the cost of capital. Furthermore, we discover that there is a positive relationship between real investment efficiency and the correlation coefficient of data factor with productivity. Our results emphasize the important role of data factor in stock pricing and real investment, as well as reveal the internal impact mechanism of data factor on equilibrium properties, which complement the existing empirical evidences and have significant implications on data application. [ABSTRACT FROM AUTHOR]

In a model of vertical competition two firms draw costly public signals that are informative about the quality of their products and then competitively set prices. When each firm generates information independently from the other, there will be overinvestment (underinvestment) in information generation if the market share of the quality follower in the subsequent market equilibrium is high (low). Moreover, information generation by one firm has a positive externality on the other firm. Hence, coordination (e.g., via industry associations) increases information generation. When product qualities are endogenous, information generation may prevent quality degradation and thus have an additional social benefit. [ABSTRACT FROM AUTHOR]

Expected returns, variances, betas, and alphas are all non-linear functions of the investment horizon. This seems to be a fatal conceptual problem for the capital asset pricing model (CAPM), which assumes a unique common horizon for all investors. We show that under the standard assumptions, the theoretical CAPM equilibrium surprisingly holds with the 1-period parameters, even when investors have heterogeneous and possibly much longer horizons. This is true not only for risk-averse investors, but for any investors with non-decreasing preferences, including prospect theory investors. Thus, the widespread practice of using monthly betas to estimate the cost of capital is theoretically justified. [ABSTRACT FROM AUTHOR]

This study introduces a theoretical framework for the Turkish natural gas market based on the principles of game theory and industrial organization. It investigates the effects of the legal and ownership unbundling on consumer surplus, social welfare, and competition. The model considers a mixed oligopoly with a transmission system operator (TSO), a state-owned incumbent, and a private firm. The state-owned incumbent is assumed to maximize consumer surplus and its own profit, while the private firm is assumed to be profit-maximizing. Additionally, the state-owned incumbent is assumed to be less efficient than the private firm. The game consists of three stages. In the first two stages, the state-owned incumbent and the private firm sequentially choose contract sizes in the upstream market. In the last stage, a contract size-restricted Cournot game is played. The findings of the study suggest that legal unbundling appears to offer greater advantages for consumer surplus and social welfare compared to ownership unbundling, particularly when considering key factors such as third-party access, non-tariff discrimination, and import liberalization. The results indicate that adopting the role of a Stackelberg follower by the state-owned incumbent in the upstream market is advantageous in terms of consumer surplus, social welfare, and competition under both unbundling approaches. [ABSTRACT FROM AUTHOR]

Dollar stores have become the fastest‐growing retail format in the United States. However, there is considerable controversy regarding their entry, particularly into markets without grocery stores, and concerns that dollar‐store entry decisions are motivated by preemptive incentives. In this paper, we aim to study the market entry of dollar stores as an equilibrium phenomenon and to examine their impact on competing store formats in a dynamic environment. We use census‐tract level data and develop a dynamic model of oligopolistic competition to estimate the impact of dollar store entry on the equilibrium entry decisions of other retailers of the same format and other formats. We find that supermarkets and other large‐format owners thrive as dollar‐store expansion removes their "competitive fringe" in shared markets, whereas other small‐format stores (other dollar stores, convenience stores, and superettes) do not. Our findings have broad implications for the effect of dollar store entry on consumer welfare, as dollar‐store entry is not associated with grocery‐store exit but rather the exit of other small‐format stores. [ABSTRACT FROM AUTHOR]

Oil palm is a major driver of tropical deforestation. A key intervention proposed to reduce the footprint of oil palm is intensifying production to free up spare land for nature, yet the indirect land‐use implications of intensification through market forces are poorly understood. We used a spatially explicit land‐rent modeling framework to characterize the supply and demand of oil palm in Indonesia under multiple yield improvement and demand elasticity scenarios and explored how shifts in market equilibria alter projections of crop expansion. Oil palm supply was sensitive to crop prices and yield improvements. Across all our scenarios, intensification raised agricultural rents and lowered the effectiveness of reductions in crop expansion. Increased yields lowered oil palm prices, but these price‐drops were not sufficient to prevent further cropland expansion from increased agricultural rents under a range of price elasticities of demand. Crucially, we found that agricultural intensification might only result in land being spared when the demand relationship was highly inelastic and crop prices were very low (i.e., a 70% price reduction). Under this scenario, the extent of land spared (∼0.32 million ha) was countered by the continued establishment of new plantations (∼1.04 million ha). Oil palm intensification in Indonesia could exacerbate current pressures on its imperiled biodiversity and should be deployed with stronger spatial planning and enforcement to prevent further cropland expansion. [ABSTRACT FROM AUTHOR]

Reward schemes are common in ride-sourcing markets. Each reward scheme incentivizes users with economic benefits as rewards for rides from the ride-sourcing platform. In practice, reward schemes differ in terms of their operational features. Operational features are the ways in which a ride-sourcing platform manages a reward scheme and users perceive and redeem their rewards. Therefore, different reward schemes involve different decision-making contexts for the platforms. As a result, it poses a challenge to understand the behavior of platforms with different types of reward schemes in the market. To address this challenge, this study analyzes the impacts of point-based and crypto-based fare-reward schemes on a ride-sourcing market. The market is defined as a mathematical model in which a ride-sourcing platform determines trip fares, commission fees, and rewards for passengers and drivers to maximize matching profits. A points-based reward scheme offers loyalty points with fixed redemption values. Issuance of point rewards incurs a liability for the reward scheme to accept users' point redemptions in the future. The crypto-based approach involves the cost of securing cryptocurrencies to reward users. Crypto rewards have various redemption values. Therefore, users perceive the value of crypto rewards based on their beliefs regarding their future value. This study performed an equilibrium analysis to elucidate the relationships between platform decisions and endogenous variables in the market using two fare-reward schemes. Subsequently, the properties of the optimal market solutions are further explored. These properties provide insights into the platform's reward and pricing decisions as follows: First, it is shown that a ride-sourcing platform is likely to adopt a single-sided reward strategy; that is, the platform's reward decisions with reward schemes are made exclusively between passengers and drivers. Second, the heterogeneity of user redemption behavior polarizes the platform's pricing decision on trip fares; that is, a ride-sourcing platform has incentives to set lower and higher trip fares when deciding to reward drivers and passengers, respectively. Third, such distinctive pricing decisions balance passenger demand with driver supply. Therefore, the ride-sourcing market can remain stable and efficient, even in the presence of the platform's reward decisions. A series of numerical experiments were performed to verify the findings of the current study. • This paper analyzes impacts of the point-based and crypto-based fare-reward schemes on a ride-sourcing market. The optimal pricing and reward decisions of ride-sourcing platforms are subject to operational features of the reward schemes. • Equilibrium analysis shows that the impact of trip fare on user retention depends on redemption behaviours of passengers and drivers in the reward schemes. The heterogeneity of their redemption behaviours becomes the reason for the platforms to make exclusive reward decisions between two sides of passengers and drivers. • The reward decisions polarize pricing strategies in such a way that the platforms have incentives to lower (higher) its trip fare when they decide to rewards drivers (passengers), while reaping benefits from passengers (drivers) owing to alleviation of matching frictions. [ABSTRACT FROM AUTHOR]

We study the problem of allocating divisible bads (chores) among multiple agents with additive utilities when monetary transfers are not allowed. The competitive rule is known for its remarkable fairness and efficiency properties in the case of goods. This rule was extended to chores by Bogomolnaia, Moulin, Sandomirskiy, and Yanovskaya. For both goods and chores, the rule produces Pareto optimal and envy-free allocations. In the case of goods, the outcome of the competitive rule can be easily computed. Competitive allocations solve the Eisenberg-Gale convex program; hence the outcome is unique and can be approximately found by standard gradient methods. An exact algorithm that runs in polynomial time in the number of agents and goods was given by Orlin. In the case of chores, the competitive rule does not solve any convex optimization problem; instead, competitive allocations correspond to local minima, local maxima, and saddle points of the Nash social welfare on the Pareto frontier of the set of feasible utilities. The Pareto frontier may contain many such points and, consequently, the outcome of the competitive rule is no longer unique. In this paper, we show that all the outcomes of the competitive rule for chores can be computed in strongly polynomial time if either the number of agents or the number of chores is fixed. The approach is based on a combination of three ideas: all consumption graphs of Pareto optimal allocations can be listed in polynomial time; for a given consumption graph, a candidate for a competitive utility profile can be constructed via an explicit formula; each candidate can be checked for competitiveness and the allocation can be reconstructed using a maximum flow computation. Our algorithm immediately gives an approximately-fair allocation of indivisible chores by the rounding technique of Barman and Krishnamurthy. Funding: This work was supported by National Science Foundation (CNS 1518941); Lady Davis Fellowship Trust, Hebrew University of Jerusalem; H2020 European Research Council (740435); Linde Institute at Caltech. [ABSTRACT FROM AUTHOR]