1,721,160 research outputs found
Simple competitive internet pricing
No full textIt is widely recognised that pricing is required to control congestion on the Internet. One lesson that has emerged from many proposals is that any price system should be simple and robust to competition. This is highlighted in the question currently under debate in the market for Internet services: should usage prices should be employed at all? In a duopoly model with overall positive network effects, it is shown that flat rate pricing can occur in equilibrium, even when the costs of measuring variable demand are very smal
Dividends, safety and liquidation when liabilities are long-term and stochastic
No full textThis paper investigates the optimal management of a firm faced with a long-term liability that occurs at a random date. Three issues are analysed: The optimal dividend policy; optimal expenditure on safety to delay the occurrence of the liability; and the optimal liquidation date of the firm. An owner faced with dynamic unlimited liability never liquidates and therefore accumulates capital to the golden rule level. For long-term liabilities, dividend payments and safety expenditure are non-decreasing over time. The owner protected by limited liability may liquidate the firm in finite time in order to avoid paying the liability. If this is the case, then it accumulates less capital than the dynamic unlimited liability owner; and may decrease dividend payments and safety expenditure over time. The paper shows that a finite liquidation date is more likely to be optimal when the arrival rate of the liability occurrence increases over time. <br/
A game theoretic analysis of international environmental pollution
No full textThis paper surveys theories of international environmental agreements. Central to the analysis is the recognition that countries assess the costs and benefits of acting cooperatively in a game theoretic way. Two hypotheses emerge: (i) cooperation is easier to sustain than standard Prisoners' Dilemma models suggest; and (ii) significant cooperation is unlikely to be achieved, especially when the gains from doing so are largest. Discussion is confined (with little loss of generality) to the case study of acid rain. Comparison of the theoretical predictions with the Second Sulphur Protocol indicate qualitative support for the second hypothesis: the protocol, it seems, achieves little more than a codification of non-cooperative behaviour
Internet telephony and the international accounting rate system
No full textThis paper attempts to provide an economic framework for assessing why and how Internet telephony may affect the international accounting rate system in particular, and communication over circuit switched networks in general. It reviews the regulatory treatment of Internet telephony, and compares the costs and prices of making international calls over the Internet and the public switched telephone network (PSTN). It argues that Internet telephony is unlikely to prove central to the downfall of the international system; other technologies, such as resale, will play a larger role. The paper also suggests a general framework in which to analyse competition between networks (such as the Internet and the PSTN). This framework indicates that differences in the preferences of end users for congestion will drive networks to specialise
Network externalities and the Coase conjecture
No full textThis paper addresses two general questions. First, what is the effect of market structure on the development of a network in a dynamic model with rational expectations? Secondly, is the intuition that network externalities are ‘economies of scale on the demand side’ correct? These questions are examined in a model of durable good production in the presence of network externalities. Two results are presented. First, the Coase conjecture fails in its strongest sense when network benefits are increasing in the current network size. Secondly, a committed monopolist may be socially preferable to a time consistent producer when network externalities are sufficiently large. The analysis indicates an analogy between network externalities and learning-by-doin
Joint Implementation and the Second Sulphur Protocol
No full textThis article analyzes the role that joint implementation (JI) might play in reducing the costliness of meeting the environmental objectives of the Second Sulphur Protocol (SSP). The experience of JI within two other major environmental agreements (the Framework Convention on Climate Change (FCCC), and the Allowance Trading Program (ATP) in the United States (US) is reviewed to see what lessons might be learned for the SSP. The article argues that the structure of the sulphur protocol limits considerably the potential for cost savings through JI in the short term. In the long term, however, JI will play a large role in the restructuring of the European electricity-generating industry, as existing power plants are replaced with capital which is compatible with the standards of the SSP
Cost-raising strategies in a symmetric, dynamic duopoly
No full textThis paper provides a characterization of the set of dynamic models in which symmetric duopolists have incentives to raise a common cost. The advantage of the dynamic analysis over existing static models is that it extends the conditions (restrictive in static models) under which symmetric cost raising is profitable. The model is illustrated by standard examples from industrial organization: quantity and price adjustment, and learning–by–doing
The timing of acquisitions
No full textWe analyse the timing of competitive bids. There are two buyers in our model, each of whom decide when and how much to bid for an object. These agents' valuations are commonly known, but are driven by a stochastic state variable that varies randomly over time. We assume that agent 1 (2) has the higher valuation when the state is high (low). We show first that there is delay in equilibrium: agent 1 bids only when the state is sufficiently high; and agent 2 bids only when the state is sufficiently low. This delay is not necessarily present when there is a single agent; it is present with two agents because competition makes payoffs convex. Secondly, the extent of delay increases with the degree of uncertainty (i.e., both agents wait for more extreme values of the state before bidding). Thirdly, we show that there is too much delay in equilibrium, relative to the efficient solution. Finally, we show that, in our model, the seller wishes to sell immediately, and to choose the lowest degree of uncertainty about the value of the object
Independence and heterogeneity in games of incomplete information
No full textThis paper provides a sufficient condition for existence and uniqueness of equilibrium, which is in monotone pure strategies, in games of incomplete information. First, we show that if each player’s incremental ex post payoff is uniformly increasing in its own action and type, and its type is sufficiently uninformative of the types of its opponents (independence), then its expected payoff satisfies a strict single crossing property in its own action and type, for any strategy profile played by its opponents. This ensures that a player’s best response to any strategy profile is a monotone pure strategy. Secondly, we show that if, in addition, there is sufficient heterogeneity of the conditional density of types, then the best response correspondence is a contraction mapping. This ensures equilibrium existence and uniqueness. In contrast to existing results, our uniqueness result does not rely on strategic complementarities; this allows for a wider range of applications
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