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By specializing Montero’s (J Environ Econ Manag 44:23-44, 2002) model of environmental regulation under Cournot competition to an oligopoly with linear demand and quadratic abatement costs, we extend his comparison of firms incentives to invest in R&D under emission and performance standards by solving for a closed form solution of the underlying two-stage game. This allows for a full comparison of the two instruments in terms of their resulting propensity for R&D and equilibrium industry output. In addition, we incorporate an equilibrium welfare analysis. Finally, we investigate a three-stage game wherein a welfare-maximizing regulator sets a socially optimal emission cap under each policy instrument. For the latter game, while closed-form solutions for the subgame-perfect equilibrium are not possible, we establish numerically that the resulting welfare is always larger under a performance standard. [ABSTRACT FROM AUTHOR]

This paper investigates the choice of a licensing mechanism by the holder of a patent whose validity is uncertain. We provide sufficient conditions of a general nature under which the licensor prefers to use a per-unit royalty contract. In particular we show that this is the case for the holders of weak patents if the strategic effect of an increase in a potential licensee's unit cost on the equilibrium industry profit is positive. The latter condition is shown to hold in a Cournot (resp. Bertrand) oligopoly with homogeneous (resp. differentiated) products under general assumptions on the demands faced by firms. As a byproduct of our analysis, we contribute to the literature on the cost paradox in oligopoly by offering some new insights of independent interest regarding the effects of cost variations on Cournot and Bertrand equilibria. [ABSTRACT FROM AUTHOR]

This paper applies the framework of endogenous timing in games to mixed quantity duopoly, wherein a private-domestic or foreign-firm competes with a public, welfare-maximizing firm. A central goal of the paper is to present a unified and general treatment of the basic question of what constitutes the appropriate solution concept-Cournot or Stackelberg-in such duopolies. We show that simultaneous play never emerges as a subgame-perfect equilibrium of the extended game, in sharp contrast to private duopoly games. We demonstrate that this result is due to the objective function of the public firm being increasing in the rival's output (instead of decreasing for a private firm). We provide sufficient conditions for the emergence of public and/or private leadership equilibrium. In all cases, private profits and social welfare are higher than under the corresponding Cournot equilibrium. We make extensive use of the basic results from the theory of supermodular games in order to avoid common extraneous assumptions such as concavity, existence and uniqueness of the different equilibria, whenever possible. Some policy implications are drawn, in particular those relating to the merits of privatization. [ABSTRACT FROM AUTHOR]

The paper examines a game-theoretic model of a financial market in which asset prices are determined endogenously in terms of a short-run equilibrium. Investors use general, adaptive strategies (portfolio rules) depending on the exogenous states of the world and the observed history of the game. The main goal is to identify portfolio rules, allowing an investor to 'survive,' i.e., to possess a positive, bounded away from zero, share of market wealth over an infinite time horizon. The model under consideration combines a strategic framework characteristic for stochastic dynamic games with an evolutionary solution concept (survival strategies), thereby linking two fundamental paradigms of game theory. [ABSTRACT FROM AUTHOR]

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 and restrictive assumptions. We show that a firm with a sufficiently large cost lead over its rival has a first-mover advantage. For the linear version of the model, we invoke a natural endogenous timing scheme coupled with equilibrium selection according to risk dominance. The analysis yields, as the unique equilibrium outcome, sequential play with the low-cost firm as leader. [Copyright &y& Elsevier]

Provides two minimal sets of assumptions on the demand and cost functions and develops new insight into the existence of Cournot equilibrium. Effects of entry on Cournot markets; Existence of Cournot equilibrium; Assumptions on the demand and cost functions; Property of quasi-competitiveness.

This paper provides general conditions on the direct demand functions in a Bertrand duopoly with differentiated substitute products and constant marginal costs, that allow an unambiguous ranking of firms' equilibrium payoffs between sequential play (with both order of moves) on the one hand, and simultaneous play on the other. The main results are that (i) when prices are strategic complements, both firms prefer sequential moves (with either order) to simultaneous moves, (ii) when prices are strategic substitutes, both firms prefer simultaneous moves to moving second in sequential play, and (iii) in the mixed strategic substitute/complement case, one firm is as in (i) and the other as in (ii). Thus, sequential moves would plausibly endogenously emerge in cases (i) and (iii), with one specified leader in the latter case. The analysis relies crucially on the theory of supermodular games, and is conducted at a high level of generality, dispensing with concavity-type assumptions, and taking into account both the issues of existence and possible non-uniqueness of the different equilibria involved. [ABSTRACT FROM AUTHOR]

We consider a model in which firms first choose process R&D expenditures and then compete in an output market. We show the symmetric equilibrium under R&D competition is sometimes unstable, in which case two asymmetric equilibria must also exist. For the latter, we find, in contrast to the literature that total profits are sometimes higher with R&D competition than with research joint venture cartelization (due to the cost asymmetry of the resulting duopoly in the noncooperative case). Furthermore, these equilibria provide another instance of R&D-induced firm heterogeneity. [ABSTRACT FROM AUTHOR]

This note reconsiders the well-known model of strategic bequest/ altruistic growth, but with stochastic production satisfying a strong convexity condition: The probability that the next stock exceeds any given level is concave in investment. Existence of a Markov-stationary equilibrium consumption schedule, which is continuous and with all slopes in [0, 1], is established. Under smooth data and interiority assumptions, this schedule is differentiable, and marginal consumption is in (0, 1). This property allows for a rigorous and straightforward treatment of the equilibrium characterization problem. [ABSTRACT FROM AUTHOR]