Imperfect Competition

Para quien es de utilidad: •Alumnos de Tª Microeconómica IV, curso 3º LE. •Alumnos de las asignaturas de Tª de Juegos y Organización Industrial del Máster en Economía: Instrumentos del Análisis Económico. Estas notas sobre competencia imperfecta están dedicadas al estudio de estructuras de mercado caracterizadas por la existencia de poder de mercado. Se estudia en primer lugar el monopolio, dedicando una atención especial a los diferentes tipos de discriminación de precios. A continuación se presenta la Tª de juegos no cooperativos y se muestra su utilidad para analizar diferentes fenómenos económicos caracterizados por la interdependencia estratégica. Finalmente, se estudian diferentes modelos de competencia oligopolística y la estabilidad de los acuerdos colusivos.

Empresas promotoras de saúde no sistema de saúde colombiano: dinâmica financeira estrutural.

Esta dissertação analisou as Empresas Promotoras de Salud (EPS), seguradoras de saúde introduzidas no sistema de saúde colombiano através da reforma sanitária instaurada com a Lei n 100/1993, desde uma perspectiva de economia política crítica, através do método de análise documental. A maioria delas são empresas privadas com finalidade lucrativa que conformaram rapidamente um oligopólio que reproduziu problemas dos modelos de Managed Care e Managed Competition já conhecidos internacionalmente. Esta dissertação analisou as relações entre os processos de financeirização do sistema capitalista e o processo de ajuste estrutural na Colômbia, com a reforma sanitária e a dinâmica financeira das EPS. Também foi analisada a introdução de mecanismos próprios do processo de financeirização na gestão financeira das EPS, como: a alavancagem; a reprodução ampliada de capital através da dívida pública; e os investimentos em ativos securitizados. Dado que o sistema de saúde atual se caracteriza por altos níveis de inequidade e injustiça, as consequências da finalidade lucrativa neste, com suas expressões concretas de sofrimento e morte na população, foram preocupações transversais deste trabalho. Os resultados desta dissertação demonstraram a concentração oligopólica do mercado de seguros privados de saúde, cujas empresas se organizaram como um cartel, dificultando o acesso aos serviços de saúde para seus segurados, o que contribuiu para a piora de indicadores de saúde da população. Quando a mobilização social obrigou a aumentar o controle sobre as EPS, estas começaram a sair do mercado declarando-se em falência, ou entrando subitamente em balanços financeiros negativos.

La evolución de destinos turísticos litorales consolidados. Análisis comparado de Balneario Camnoriú (Brasil) y Benidorm (España)

El objetivo de este trabajo consiste en estudiar la evolución de los destinos turísticos litorales consolidados a partir del análisis comparado entre Balneario Camboriú y Benidorm. Se trata de dos destinos localizados en contextos territoriales y turísticos diferentes, en los que se contrastan de manera empírica los indicadores de evolución de los destinos y se vinculan las dinámicas evolutivas con el modelo territorial-turístico resultante en cada destino. El análisis realizado permite contrastar los postulados de los modelos evolutivos clásicos (Butler, 1980) e incorporar los nuevos planteamientos de la geografía económica evolutiva. La investigación delimita cronológicamente los periodos de desarrollo de ambos destinos para identificar los factores con mayor incidencia en la evolución de los mismos. Una evolución marcada, fundamentalmente, por la ubicación geográfica, la planificación y gestión urbanoturística a diferentes escalas, la dependencia de determinados mercados emisores y la influencia de factores macroeconómicos. Un conjunto de factores interrelacionados que dibujan trayectorias dispares para los destinos analizados.

Strategic behavior under partial cooperation

We investigate how a group of players might cooperate with each other within the setting of a non-cooperative game. We pursue two notions of partial cooperative equilibria that follow a modification of Nash's best response rationality rather than a core-like approach. Partial cooperative Nash equilibrium treats non-cooperative players and the coalition of cooperators symmetrically, while the notion of partial cooperative leadership equilibrium assumes that the group of cooperators has a first-mover advantage. We prove existence theorems for both types of equilibria. We look at three well-known applications under partial cooperation. In a game of voluntary provision of a public good we show that our two new equilibrium notions of partial cooperation coincide. In a modified Cournot oligopoly, we identify multiple equilibria of each type and show that a non-cooperator may have a higher payoff than a cooperator. In contrast, under partial cooperation in a symmetric Salop City game, a cooperator enjoys a higher return.

Asymmetric information without common priors: an indirect evolutionary analysis of quantity competition

The common prior assumption justifies private beliefs as posterior probabilities when updating a common prior based on individual information. We dispose of the common prior assumption for a homogeneous oligopoly market with uncertain costs and firms entertaining arbitrary priors about other firms' cost-type. We show that true prior beliefs can not be evolutionarily stable when truly expected profit measures (reproductive) success.

A Note on Networks of Collaboration in Multimarket Oligopolies

In this note, we extend the Goyal and Joshi’s model of collaboration networks in oligopoly to multi-market situations. We examine the incentive of firms to form links and the architectures of the resulting equilibrium networks in this setting. We then present some results on efficient networks.

Partial Cooperation in Strategic Decision Situations

We consider a normal form game in which there is a single exogenously given coalition of cooperating players that can write a binding agreement on pre-selected actions. These collective actions typically represent a certain number of dimensions in the players’ strategy space. The actions represented by the other dimensions of the strategy space remain under the complete, individual control of the players.
We consider a standard extension of the Nash equilibrium concept denoted as a partial cooperative equilibrium as well as an equilibrium concept in which the coalition of cooperators has a leadership position. Existence results are developed for these new equilibrium concepts. We identify conditions on these partial cooperative games under which the various equilibrium concepts are equivalent.
We apply this game theoretic framework to existing models of multi-market oligopolies and international pollution abatement. In a multi-market oligopoly typically a merger paradox emerges in the partial cooperative equilibrium, which vanishes if the cartel of collaborators exploits its leadership position. Our application to international pollution abatement treaties shows that cooperation by a sufficiently large group of countries results in a Pareto improvement over the standard tragedy of the commons outcome described by the Nash equilibrium.

Bertrand and Cournot oligopolies when rivals' costs are unknown

We study Bertrand and Cournot oligopoly models with incomplete information about rivals’ costs, where the uncertainty is given by a uniform distribution. We compute the Bayesian- Nash equilibrium of both games, the ex-ante expected profits and the ex-post profits of each firm. We see that, in the price competition, even though only one firm produces in equilibrium, all firms have a positive ex-ante expected profit.

Environmental taxes in a public Stackelberg leader duopoly

We study whether privatization of a public firm improves (or deteriorates) the environment in a mixed Stackelberg duopoly with the public firm as the leader. We assume that each firm can prevent pollution by undertaking abatement measures. We get that, since in the mixed market the industry output is higher than in the private market, the abatement levels are also higher in the mixed market, and, thus, environmental tax rate in the mixed duopoly is higher than that in the privatized duopoly. Furthermore, the environment is more damaged in the mixed than in the private market. The overall effect on the social welfare is that it will becomes higher in the private than in the mixed market.

Licensing in an international triopoly

We study the effects of entry of two foreign firms on domestic welfare in the presence of licensing, when the incumbent is technologically superior to the entrants. We consider two different situations: (i) the cost-reducing innovation is licensed to both entrants; (ii) the cost- reducing innovation is licensed to just one of the entrants. We analyse three kind of license: (lump- sum) fixed-fee; (per-unit) royalty; and two-part tariff, that is a combination of a fixed-fee and a royalty. We prove that a two part tariff is never an optimal licensing scheme for the incumbent. Moreover, (i) when the technology is licensed to the two entrants, the optimal contract consists of a licensing with only output royalty; and (ii) when the technology is licensed to just one of the entrants, the optimal contract consists of a licensing with only a fixed-fee.

Essays on bounded rationality: Individual decision and strategic interaction

Economics is a social science which, therefore, focuses on people and on the decisions they make, be it in an individual context, or in group situations. It studies human choices, in face of needs to be fulfilled, and a limited amount of resources to fulfill them. For a long time, there was a convergence between the normative and positive views of human behavior, in that the ideal and predicted decisions of agents in economic models were entangled in one single concept. That is, it was assumed that the best that could be done in each situation was exactly the choice that would prevail. Or, at least, that the facts that economics needed to explain could be understood in the light of models in which individual agents act as if they are able to make ideal decisions. However, in the last decades, the complexity of the environment in which economic decisions are made and the limits on the ability of agents to deal with it have been recognized, and incorporated into models of decision making in what came to be known as the bounded rationality paradigm. This was triggered by the incapacity of the unboundedly rationality paradigm to explain observed phenomena and behavior. This thesis contributes to the literature in three different ways. Chapter 1 is a survey on bounded rationality, which gathers and organizes the contributions to the field since Simon (1955) first recognized the necessity to account for the limits on human rationality. The focus of the survey is on theoretical work rather than the experimental literature which presents evidence of actual behavior that differs from what classic rationality predicts. The general framework is as follows. Given a set of exogenous variables, the economic agent needs to choose an element from the choice set that is avail- able to him, in order to optimize the expected value of an objective function (assuming his preferences are representable by such a function). If this problem is too complex for the agent to deal with, one or more of its elements is simplified. Each bounded rationality theory is categorized according to the most relevant element it simplifes. Chapter 2 proposes a novel theory of bounded rationality. Much in the same fashion as Conlisk (1980) and Gabaix (2014), we assume that thinking is costly in the sense that agents have to pay a cost for performing mental operations. In our model, if they choose not to think, such cost is avoided, but they are left with a single alternative, labeled the default choice. We exemplify the idea with a very simple model of consumer choice and identify the concept of isofin curves, i.e., sets of default choices which generate the same utility net of thinking cost. Then, we apply the idea to a linear symmetric Cournot duopoly, in which the default choice can be interpreted as the most natural quantity to be produced in the market. We find that, as the thinking cost increases, the number of firms thinking in equilibrium decreases. More interestingly, for intermediate levels of thinking cost, an equilibrium in which one of the firms chooses the default quantity and the other best responds to it exists, generating asymmetric choices in a symmetric model. Our model is able to explain well-known regularities identified in the Cournot experimental literature, such as the adoption of different strategies by players (Huck et al. , 1999), the inter temporal rigidity of choices (Bosch-Dom enech & Vriend, 2003) and the dispersion of quantities in the context of di cult decision making (Bosch-Dom enech & Vriend, 2003). Chapter 3 applies a model of bounded rationality in a game-theoretic set- ting to the well-known turnout paradox in large elections, pivotal probabilities vanish very quickly and no one should vote, in sharp contrast with the ob- served high levels of turnout. Inspired by the concept of rhizomatic thinking, introduced by Bravo-Furtado & Côrte-Real (2009a), we assume that each per- son is self-delusional in the sense that, when making a decision, she believes that a fraction of the people who support the same party decides alike, even if no communication is established between them. This kind of belief simplifies the decision of the agent, as it reduces the number of players he believes to be playing against { it is thus a bounded rationality approach. Studying a two-party first-past-the-post election with a continuum of self-delusional agents, we show that the turnout rate is positive in all the possible equilibria, and that it can be as high as 100%. The game displays multiple equilibria, at least one of which entails a victory of the bigger party. The smaller one may also win, provided its relative size is not too small; more self-delusional voters in the minority party decreases this threshold size. Our model is able to explain some empirical facts, such as the possibility that a close election leads to low turnout (Geys, 2006), a lower margin of victory when turnout is higher (Geys, 2006) and high turnout rates favoring the minority (Bernhagen & Marsh, 1997).

You get what you pay for : independent music and Canadian public policy

The aim of this MA thesis is to demonstrate how corporate concentration within the global music industry specifically affects the Canadian music industry's ability to compete for its own national audience as well as audiences worldwide. Federal public policies, regulatory regimes and subsidies are considered within the context of the structure of the global marketplace which is, in effect, an oligopoly controlled by four major corporations. Through an extensive literature review of political economy theory, Canadian public policies and music studies, as well as personal interviews conducted with Canadian musicians, entrepreneurs and public servants, I will situate my research within the body of political economy theory; present a detailed report of the structure of the global music industry; address the key players within the industry; describe the relationship between the major corporations and the independent companies operating in the industry; discuss how new technologies affect said relationships; consider the effectiveness of Canadian public policies in safeguarding the national music industry; and recommend steps that can be taken to remedy the shortcomings of Federal policies and regulatory regimes.

Temporary Natural Resource Cartels

We analyze the behavior of a nonrenewable resource cartel that anticipates being forced, at some date in the future, to break-up into an oligopolistic market in which its members will then have to compete as rivals. Under reasonable assumptions about the value function of the individual firms in the oligopolistic equilibrium that follows the break-up, we show that the cartel will then produce more over the same interval of time than it would if there were no threat of dissolution, and that its rate of extraction is a decreasing function of the cartel's life; that there are circumstances under which the cartel will attach a negative marginal value to the resource stocks, in which case the rate of depletion will be increasing over time during the cartel phase; that, for a given date of dissolution, the equilibrium stocks allocated to the post-cartel phase will increase as a function of the total initial stocks, whereas those allocated to the cartel phase will increase at first, but begin decreasing beyond some level of the total initial stocks.

Conceptualisation Of Model For Studying Consumer Purchase Behaviour Of Passenger Cars

Automobile Industry in India is influenced by the presence of national and multi-national manufacturers. The presence of many manufacturers and brands in the state provides many choices to the customer. The current market for car manufacturers has been transformed from a monopoly of one or two manufacturers in the seventies to oligopoly of many manufacturers in the current marketing scenario. The main objective of the research paper is to explore and conceptualize various parameters and develop a model, which influence the purchase patterns of passenger cars in the State of Kerala. Thus, the main purpose of this paper is to come up with a model, which shall facilitate further study on the consumer purchase behaviour patterns of passenger car owners in the State of Kerala, India. The author intends to undertake further quantitative analysis to verify and validate the model so developed. The main methods used for this paper are secondary research on available material, depth interview of car dealers, car financing agencies and car owners in the city of Cochin, in Kerala State in India. The depth interviews were conducted with the use of prepared questionnaire for car dealers, car customers and car financing agencies. The findings resulted in the identification of the parameters that influence the consumer purchase behaviour of passenger cars and the formulation of the model, which will be the basis for the further research of the author. The paper will be of tremendous value to the existing and new car manufacturers both indigenous and foreign, to formalize and strategies their policies towards an effective marketing strategy, so as to market their models in the State, which is known for its high literacy, consumerism and higher educational penetration

Core Labor Rights

The working paper’s main objective is to explore the extent to which non-compliance to international labor rights is caused by global competition. From the perspective of institutional economics, compliance with core labor rights is beneficial for sustainable development. Nonetheless, violations of these rights occur on a massive scale. The violators usually blame competitive pressures. A number of studies have come to the conclusion that non-compliance does not provide for a competitive edge, thereby denying any economic rationale for non-compliance. While we sympathize with this conclusion, we find that these studies suffer from faulty assumptions in the design of their regression analyses. The assumption of perfect markets devoid of power relations is particularly unrealistic. While workers' rights promise long-term benefits, they may incur short-term production cost increases. On the supply side, the production sites with the highest amount of labor rights violations are characterized by a near perfect competitive situation. The demand side, however, is dominated by an oligopoly of brand name companies and large retailers. Facing a large pool of suppliers, these companies enjoy more bargaining power. Developing countries, the hosts to most of these suppliers, are therefore limited in their ability to raise labor standards on their own. This competitive situation, however, is the very reason why labor rights have to be negotiated internationally. Our exploration starts with an outline of the institutionalist argument of the benefits of core labor rights. Second, we briefly examine some cross-country empirical studies on the impact of trade liberalization (as a proxy for competitive pressures). Third, we develop our own argument which differentiates the impact of trade liberalization along the axes of labor- and capital-intensive production as well as low and medium skill production. Finally, we present evidence from a study on the impact of trade liberalization in Indonesia on the garment industry as an example of a low skill, laborintensive industry on the one hand, and the automobile as an example for a medium skill, capital-intensive industry on the other hand. Because the garment industry’s workforce consists mainly of women, we also discuss the gender dimension of trade liberalization.