1,721,463 research outputs found
A Schumpeterian view of the interplay between innovation and concentration in the EU defence industry
Full text linkThe relationship between industry structure, aggregate R&D activity, and the pace and quality of the resulting innovation process is currently the subject of a lively debate across NATO in general and even more so among its European members. This paper tackles this issue from a standpoint belonging to the tradition of industrial economics, adapting it to the specific context of the defence sector. This is done with a view to stressing the need of increasing the degree of concentration in order to increase standardization and interoperability of defence systems and facilitate the exploitation of scale economies. In the traditional jargon of industrial organization
theory, this amounts to vindicating the Schumpeterian view according to which increasing concentration (eventually all the way up to pure monopoly) monotonically fosters innovation incentives, while mitigating effort duplications affecting large and longlasting R&D projects. One additional implication, equally relevant, is that the concentration process can indeed be facilitated, in the short to medium term, by systematically resorting to the creation of research joint ventures and/or R&D cartels so as to boost spillover effects and reduce excess investments
Green Innovation and Market Power
No full textThis review summarizes the extant debate on the interplay between oligopolistic behavior and policy stimuli in determining firms' green R&D efforts. It encompasses models based on the representative consumer and discrete choice approaches, under both Cournot and Bertrand competition. It also draws on the growing literature on environmental quality, green consumerism's ability to act as a net substitute for environmental policy and the Porter hypothesis. The review discusses empirical evidence on the main results of theoretical models. Several plausible directions for future research are also proposed
Managerial delegation in a dynamic renewable resource oligopoly
Full text linkI propose a differential oligopoly game of resource extraction under (quasi-static) open-loop and nonlinear feedback strategies, where firms are managerial and two alternative types of delegation contract are considered. Under open-loop information, delegation expands the residual steady state resource stock. Conversely, under nonlinear feedback information the outcome depends on the structure of managerial incentives. If sales are used, once again delegation favours resource preservation. On the contrary, if market shares are included in the delegation contract, this combines with an underlying voracity effect in shrinking the steady state volume of the resource
Cartel Size and Collusive Stability with Non-Capitalistic Players
Full text linkA well established belief both in the game-theoretic IO and in policy debates is that market concentration facilitates collusion. We show that this piece of conventional wisdom relies upon the assumption of profit-seeking behaviour, for it may be reversed when firms pursue other plausible goals. To illustrate our intuition, we investigate the incentives to tacit collusion in an industry formed by Labor-Managed (LM) enterprises. We characterize the perfect equilibrium of a supergame in which LM firms play an infinitely repeated Cournot game. We show that the critical threshold of the discount factor above which collusion is stable (i) is lower in the LM industry than in the capitalistic one; (ii) monotonically decreases with the number of firms
Quality improvement and process innovation in monopoly: A dynamic analysis
Full text linkAbstract We investigate the R&D portfolio of a monopolist investing in cost-reducing and quality enhancing R&D. Incentives along the two directions are inversely related to the size of market demand, and independent of each other. The stability analysis shows the existence of a unique stable steady state equilibrium, which is a saddle point. Finally, we show that the monopolist undersupplies product quality as compared to the social optimum, while its investment in the abatement of marginal cost is socially efficient
Defensive weapons and star wars: a supergame with optimal punishments
Full text linkWe model the perspective faced by nuclear powers involved in a supergame where nuclear deterrence is used to stabilise peace. This setting allows us to investigate the bearings of defensive weapons on the effectiveness of deterrence and peace stability, relying on one-shot optimal punishments. We find that the sustainability of peace is unaffected by defensive shields if the latter are symmetric across countries, while asymmetric endowments of such weapons have clear-cut destabilising consequences
Ranking Bertrand, Cournot and Supply Function Equilibria in Oligopoly
Full text linkWe show that the standard argument according to which supply function equilibria rank intermediate between Bertrand and Cournot equilibria may be reversed. We prove this result within a static oligopolistic game in which both supply function competition and Cournot competition yield a unique Nash equilibrium, whereas price setting yields a continuum of Nash equilibria. There are parameter regions in which Bertrand profits are higher than Cournot ones, with the latter being higher than in the supply function equilibrium. Such reversal of the typical ranking occurs when price-setting mimics collusion. We then show that the reversal in profits is responsible for a reversal in the welfare performance of the industry
To Adjust or not to Adjust after a Cost-Push Shock? A Simple Duopoly Model with (and without) Resilience
Full text linkWe characterize the equilibrium in a homogeneous good Cournot duopoly in which firms have the choice to react to a cost-push shock by paying a lump-sum adjustment cost in order to offset the initial rise in marginal cost. Our results show that the size of the shock and the size of the adjustment cost jointly determine the nature and the number of the equilibria generated in the game. In particular, if the adjustment cost is high enough, at least one firm decides not to adjust at the pure strategy equilibrium, and such a partial adjustment by the industry can be socially efficient as well. Some implications of this partial equilibrium analysis about an industry' resilience are outlined
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