Outsourcing versus FDI in oligopoly equilibrium

We consider the make-or-buy decision of oligopolistic firms in an industry in which final good production requires specialised inputs. Factor price considerations dictate that firms acquire the intermediate abroad, by either producing it in a wholly owned subsidiary or outsourcing it to a supplier who must make a relationship specific investment. Firms’ internationalisation mode depends on cost and strategic considerations. Crucially, asymmetric equilibria emerge, with firms choosing different modes of internationalisation, even when they are ex-ante identical. With ex-ante asymmetries, lower cost producers have a stronger incentive to vertically integrate (FDI), while higher cost firms are more likely to outsource.

Strategic investment and international outsourcing in unionised oligopoly

We critically consider the conventional belief that the attractiveness of international outsourcing lies in cheaper labour costs overseas and that it offers a means to ‘escape’ the power of unions. We develop an oligopoly model in which firms facing unionised domestic labour market choose between producing an intermediate in-house or outsourcing it to a non-unionised foreign supplier that makes a relationship specific investment in developing the intermediate. We show that outsourcing typically results in higher wages and does not always reduce marginal costs. Trade liberalisation favours outsourcing particularly for the relatively less efficient firms.

Noncooperative Oligopoly in Markets with a Continuum of Traders: A Limit Theorem µa la Cournot

In this paper, we consider an exchange economy µa la Shitovitz (1973), with atoms and an atomless set. We associate with it a strategic market game of the kind first proposed by Lloyd S. Shapley and known as the Shapley window model. We analyze the relationship between the set of the Cournot-Nash equilibrium allocations of the strategic market game and the Walras equilibrium allocations of the exchange economy with which it is associated. We show, with an example, that even when atoms are countably in¯nite, any Cournot-Nash equilibrium allocation of the game is not a Walras equilibrium of the underlying exchange economy. Accordingly, in the original spirit of Cournot (1838), we par- tially replicate the mixed exchange economy by increasing the number of atoms, without a®ecting the atomless part, and ensuring that the measure space of agents remains finite. We show that any sequence of Cournot-Nash equilibrium allocations of the strategic market games associated with the partially replicated exchange economies approximates a Walras equilibrium allocation of the original exchange economy.

Non-Cooperative Asymptotic Oligopoly in Economies with Infinitely Many Commodities

In this paper, we extend the non-cooperative analysis of oligopoly to exchange economics with infinitely many commodities by using strategic market games. This setting can be interpreted as a model of oligopoly with differentiated commodities by using the Hotelling line. We prove the existence of an "active" Cournot-Nash equilibrium and show that, when traders are replicated, the price vector and the allocation converge to the Walras equilibrium. We examine how the notion of oligopoly extends to our setting with a countable infinity of commodities by distinguishing between asymptotic oligopolists and asymptotic price-takes. We illustrate these notions via a number of examples.

Bilateral symmetry of radial pulse in high-level tennis players: implications for the validity of central aortic pulse wave analysis.

BACKGROUND: Reconstruction of the central aortic pressure wave from the noninvasive recording of the radial pulse with applanation tonometry has become a standard tool in the field of hypertension. It is not presently known whether recording the radial pulse on the dominant or the nondominant side has any effect on such reconstruction. METHOD: We carried out radial applanation tonometry on both forearms in young, healthy, male volunteers, who were either sedentary (n = 11) or high-level tennis players (n = 10). The purpose of including tennis players was to investigate individuals with extreme asymmetry between the dominant and nondominant upper limb. RESULTS: In the sedentary individuals, forearm circumference and handgrip strength were slightly larger on the dominant (mean +/- SD respectively 27.9 +/- 1.5 cm and 53.8 +/- 10 kg) than on nondominant side (27.3 +/- 1.6 cm, P < 0.001 vs. dominant, and 52.1 +/- 11 kg, P = NS). In the tennis players, differences between sides were more conspicuous (forearm circumference: dominant 28.0 +/- 1.7 cm nondominant 26.4 +/- 1.5 cm, P < 0.001; handgrip strength 61.4 +/- 10.8 vs. 53.4 +/- 9.7 kg, P < 0.001). We found that in both sedentary individuals and tennis players, the radial pulse had identical shape on both sides and, consequently, the reconstructed central aortic pressure waveforms, as well as derived indices of central pulsatility, were not dependent on the side where applanation tonometry was carried out. CONCLUSION: Evidence from individuals with maximal asymmetry of dominant vs. nondominant upper limb indicates that laterality of measurement is not a methodological issue for central pulse wave analysis carried out with radial applanation tonometry.

Bilateral uveal pigmented alterations with remarkable evolution: long term follow-up in a case of possible bilateral diffuse uveal melanocytic proliferation

Purpose: to describe a case of probable bilateral diffuse uveal melanocytic proliferation (BDUMP) with scleral involvement, free from systemic malignancies and cataract. Methods: fifty months of follow up with recurrent complete ophthalmological examinations, including fundus photography, fluorescein/indocyanine green angiography (FA) and optical coherence tomography (OCT). Investigations also included an electroretinography (ERG) and histological examination of scleral biopsy. Extraocular malignancies were repeatedly searched. Results: the patient was a 61 year-old Italian man with chronic hepatitis type C. At first visit his best corrected visual acuity (BCVA) was 20/32 in OS and 20/25 in OD. Funduscopy showed multiple patch-shaped pigmented alterations involving macular region and mid retinal periphery. FA showed corresponding areas of late-phase hyperfluorescent pinpoints (figure 1a, OS) and intemediate-phase hypocyanescence (figure 1b, OS), with subtle serous neurosensory retinal detachment confirmed by OCT. Photopic and scotopic ERG tested normal. Systemic prednisone was administered for one month without any improvement. After ten months round pigmentary lesions appeared also in superior scleral surface of both eyes. Biopsy allowed to disclose slightly pigmented spindle cells. BCVA worsened for further 10 months, with enlargement of FA alteration areas but lenses still clear. After 30 months spontaneous coalescence and atrophy of retinal lesions started, paralleled by progressive visual recovery. At the end of our follow up BCVA was 20/25 in OU while scleral pigmentary lesions remained unchanged. Conclusions: we report the case of a patient with main features of BDUMP and some unusual findings. Although not all classical diagnostic criteria were fulfilled, the presence of scleral pigmented lesions and spontaneous visual recovery may enlarge clinical spectrum of the disease.

Growing up with bilateral hippocampal atrophy: from childhood to teenage.

The respective roles of the medial temporal lobe (MTL) structures in memory are controversial. Some authors put forward a modular account according to which episodic memory and recollection-based processes are crucially dependent on the hippocampal formation whereas semantic acquisition and familiarity-based processes rely on the adjacent parahippocampal gyri. Others defend a unitary view. We report the case of VJ, a boy with developmental amnesia of most likely perinatal onset diagnosed at the age of 8. Magnetic resonance imaging (MRI), including quantitative volumetric measurements of the hippocampal formation and of the entorhinal, perirhinal, and temporopolar cortices, showed severe, bilateral atrophy of the hippocampal formation, fornix and mammillary bodies; by contrast, the perirhinal cortex was within normal range and the entorhinal and temporopolar cortex remained within two standard deviations (SDs) from controls' mean. We examined the development of his semantic knowledge from childhood to teenage as well as his recognition and cued recall memory abilities. On tasks tapping semantic memory, VJ increased his raw scores across years at the same rate as children from large standardisation samples, except for one task; he achieved average performance, consistent with his socio-educational background. He performed within normal range on 74% of recognition tests and achieved average to above average scores on 42% of them despite very severe impairment on 82% of episodic recall tasks. Both faces and landscapes-scenes gave rise to above average scores when tested with coloured stimuli. Cued recall, although impaired, was largely superior to free recall. This case supports a modular account of the MTL with episodic, but not semantic memory depending on the hippocampal formation. Furthermore, the overall pattern of findings is consistent with evidence from both brain-damaged and neuroimaging studies indicating that recollection requires intact hippocampal formation and familiarity relies, at least partly, on the adjacent temporal lobe cortex.

Product differentiation, competitive pressure and the effects of innovation on the success and survivability of firms in oligopoly markets

In a recent paper Tishler and Milstein (2009) fi…nd that increased competition may increase aggregate R&D spending while market output decreases. Therefore, they obtain the surprising result that R&D spending is excessive when competition becomes intense. Their result is based on the standard linear demand function for differentiated products introduced by Bowley (1924) where decreased product differentiation is interpreted as more competitive pressure. In this paper I show that at an aggregate level this interpretation is problematic because equilibrium effects are dominated by a demand reduction effect. A slight modifi…cation of the standard demand function eliminates this effect. For the Tishler and Milstein (2009) setting it is shown that then increased competition increases both R&D spending and aggregate market output. Therefore, at least for consumers, more intense competition increases welfare. Journal of Economic Literature Classi…fication Numbers: D43, L1, O3. Keywords: Oligopoly markets, Product differentiation, Competitive pressure.

Multi-stage oligopoly models with nested logit demand structures: A simplifying approach

Solving multi-stage oligopoly models by backward induction can easily become a com- plex task when rms are multi-product and demands are derived from a nested logit frame- work. This paper shows that under the assumption that within-segment rm shares are equal across segments, the analytical expression for equilibrium pro ts can be substantially simpli ed. The size of the error arising when this condition does not hold perfectly is also computed. Through numerical examples, it is shown that the error is rather small in general. Therefore, using this assumption allows to gain analytical tractability in a class of models that has been used to approach relevant policy questions, such as for example rm entry in an industry or the relation between competition and location. The simplifying approach proposed in this paper is aimed at helping improving these type of models for reaching more accurate recommendations.

Benign pineal cysts in children with bilateral retinoblastoma: a new variant of trilateral retinoblastoma?

PURPOSE: Patients with hereditary retinoblastoma (Rb) develop in 4%-8% a malignant midline tumor called trilateral Rb (TRb). We report in this study on benign pineal cysts observed in patients investigated for TRb. PATIENTS AND METHODS: Between September 1990 and December 2001, 172 patients were screened for TRb. Ninty-five had bilateral, 77 unilateral disease. The median age at diagnosis of Rb was 7 months (range 1-26). Treatment included enucleation, local treatment with cryotherapy or photocoagulation, first-line chemotherapy (CT), thermo-chemotherapy (TCT), Ruthenium plaque, and, rarely, external beam radiation (EBR). RESULTS: TRb was found in 5/95 patients (5.3%) with bilateral disease. Interestingly, five other patients (5.3%) presented a pineal cyst on magnetic resonance imaging (MRI). No cysts were recorded in the 77 patients with unilateral disease. This difference was statistically significant (P < 0.05). The median age at diagnosis of the pineal cyst was 26 months (range 16-80), much younger than reported in literature for healthy children. Four of five patients with TRb died of the disease, while all the patients with pineal cysts remained stable and asymptomatic during a median follow-up of 41 months (range 37-54). CONCLUSIONS: This report describes benign cystic lesions of the pineal gland in patients with hereditary Rb, suggesting a benign variant of TRb. Underlying possible pathogenetic mechanisms are discussed.