Raising rivals' fixed costs

This paper analyses the strategic use of fixed costs to deter entry or monopolize a market in a standard Cournot framework. First of all a general case shows how the presence of fixed costs can affect the possible equilibria to the Cournot game. It is shown that the presence of a firm with a first-mover advantage can have important implications if fixed costs are raised. In addition the forward induction process becomes important in determining plausible equilibria. The use of firstly regulation and secondly ‘nuisance’ law-suits are considered as strategies to increase fixed costs.

Raising the bar for systematic conservation planning

Mathematical methods in systematic conservation planning (SCP) represent a significant step toward cost-effective, transparent allocation of resources for biodiversity conservation. However, research demonstrates important consequences of uncertainties in SCP. Current research often relies on simplified case studies with unknown forms and amounts of uncertainty and low statistical power for generalizing results. Consequently, conservation managers have little evidence for the true performance of conservation planning methods in their own complex, uncertain applications. SCP needs to build evidence for predictive models of error and robustness to multiple, simultaneous uncertainties across a wide range of problems of known complexity. Only then can we determine true performance rather than how a method appears to perform on data with unknown uncertainty.

Raising rivals’ fixed costs

This article demonstrates that raising fixed costs can serve as a credible mechanism for a well placed firm to exclude its rivals. We identify a number of credible avenues, such as increased regulation, vexatious litigation and increased prices for essential inputs, through which such a firm can raise fixed costs. We show that for a wide range of oligopoly models this may be a profitable strategy, even if the firm’s own fixed costs are affected as much (or even more) than its rivals and even if it is less efficient. The resulting reduction in the number of firms in the market is detrimental to consumer welfare and hence worthy of scrutiny by competition and regulatory authorities.