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Mahmudul Anam, Syed A. Basher, and Shin-Hwan Chiang "Mixed Oligopoly under Demand Uncertainty".

http://www.bepress.com/bejte/vol7/iss1/art24

Christian Hogendorn "Tacit Collusion in Capacity Investment: The Role of Capacity Exchanges".

http://www.bepress.com/bejte/vol7/iss1/art25

Hassan Benchekroun and Denis Claude "Tax Differentials and the Segmentation of Networks of Cooperation in Oligopoly".

http://www.bepress.com/bejte/vol7/iss1/art26

Kalyan Chatterjee and Y. Stephen Chiu "When Does Competition Lead to Efficient Investments?".

http://www.bepress.com/bejte/vol7/iss1/art27

Klaus K. Kultti and Paavo A. Miettinen "Herding with Costly Observation".

http://www.bepress.com/bejte/vol7/iss1/art28

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ABSTRACTS AND CITATIONS OF RECENTLY PUBLISHED PAPERS

Mahmudul Anam, Syed A. Basher, and Shin-Hwan Chiang (2007) "Mixed Oligopoly under Demand Uncertainty", The B.E. Journal of Theoretical Economics: Vol. 7: Iss. 1 (Topics), Article 24.

http://www.bepress.com/bejte/vol7/iss1/art24

ABSTRACT:

In this paper we introduce product demand uncertainty in a mixed oligopoly model and reexamine the nature of sub-game perfect Nash equilibrium (SPNE) when firms decide in the first stage whether to lead or follow in the subsequent quantity-setting game. In the non-stochastic setting, Pal (1998) demonstrated that when a public firm competes with a domestic private firm, multiple equilibria exist but the efficient equilibrium outcome is for the public firm to follow. Matsumura (2003a) proved that when the public firm's rival is a foreign private firm, leadership of the public firm is both efficient as well as SPN equilibrium. Our stochastic model shows that when the leader must commit to output before the resolution of uncertainty, multiple SPNE is possible. Whether the equilibrium outcome is public or private leadership hinges upon the degree of privatization and market volatility. More importantly, Pareto-inefficient simultaneous production is a likely SPNE. Our results are driven by the fact that the resolution of uncertainty enhances the profits of the follower firm in a manner that is well known in real option theory.

Christian Hogendorn (2007) "Tacit Collusion in Capacity Investment: The Role of Capacity Exchanges", The B.E. Journal of Theoretical Economics: Vol. 7: Iss. 1 (Topics), Article 25.

http://www.bepress.com/bejte/vol7/iss1/art25

ABSTRACT:

In many capacity-intensive industries (e.g. electricity, bandwidth), exchanges allow firms, including competitors, to buy and sell wholesale capacity before selling on the retail market. Capacity exchanges allow firms to smooth demand shocks, but do they also facilitate tacit collusion to limit capacity investment? This paper models investment and exchange in a one-shot game and in a repeated game with tacit collusion. It finds that the presence of the exchange does not reduce total capacity investment, and thus does not raise consumer prices. In fact, the exchange may make it more difficult to sustain tacit collusion.

Hassan Benchekroun and Denis Claude (2007) "Tax Differentials and the Segmentation of Networks of Cooperation in Oligopoly", The B.E. Journal of Theoretical Economics: Vol. 7: Iss. 1 (Topics), Article 26.

http://www.bepress.com/bejte/vol7/iss1/art26

ABSTRACT:

This paper studies the effects of uncoordinated environmental tax policies on firms' incentives to form bilateral R&D collaborations. It is shown that the complete network is pair-wise stable for small differences in the taxation of environmental emissions. Larger tax differentials may induce firms to abandon all their international collaborations.

Kalyan Chatterjee and Y. Stephen Chiu (2007) "When Does Competition Lead to Efficient Investments?", The B.E. Journal of Theoretical Economics: Vol. 7: Iss. 1 (Topics), Article 27.

http://www.bepress.com/bejte/vol7/iss1/art27

ABSTRACT:

The paper studies agents' general or specific investment decisions under different ownership structures in a thin, decentralized market where each agent's decision affects the decisions and welfare of other agents mainly through indirect market linkages. It focuses on the roles of both competition and ownership. An investor is more likely to make specific investments as an employee than as an owner. "Excess competition among investors" makes efficient, specific investments more likely. Otherwise, inefficient, general investments and irrelevance of ownership are more likely to result. The problem in which the choice variable is investment level, instead of investment type, yields less contrasting results.

Klaus K. Kultti and Paavo A. Miettinen (2007) "Herding with Costly Observation", The B.E. Journal of Theoretical Economics: Vol. 7: Iss. 1 (Topics), Article 28.

http://www.bepress.com/bejte/vol7/iss1/art28

ABSTRACT:

We characterize optimal strategies in a simple herding model where observations have a small cost. We assume that there are two states and two possible signals that each agent may get. The prior distribution is biased towards adopting behavior. That is, ex-ante, adopting gives a higher expected utility than not adopting. Contrary to Kultti & Miettinen (2005) herding does not arise deterministically in this model when the cost of observation is small.