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.

Essays on Competition in the Pharmaceutical Industry

Chapter 1: Patents and Entry Competition in the Pharmaceutical Industry: The Role of Marketing Exclusivity Effective patent length for innovation drugs is severely curtailed because of extensive efficacy and safety tests required for FDA approval, raising concern over adequacy of incentives for new drug development. The Hatch-Waxman Act extends patent length for new drugs by five years, but also promotes generic entry by simplifying approval procedures and granting 180-day marketing exclusivity to a first generic entrant before the patent expires. In this paper we present a dynamic model to examine the effect of marketing exclusivity. We find that marketing exclusivity may be redundant and its removal may increase generic firms' profits and social welfare. Chapter 2: Why Authorized Generics?: Theoretical and Empirical Investigations Facing generic competition, the brand-name companies some-times launch generic versions themselves called authorized generics. This practice is puzzling. If it is cannibalization, it cannot be profitable. If it is divisionalization, it should be practiced always instead of sometimes. I explain this phenomenon in terms of switching costs in a model in which the incumbent first develops a customer base to ready itself against generic competition later. I show that only sufficiently low switching costs or large market size justifies launch of AGs. I then use prescription drug data to test those results and find support. Chapter 3: The Merger Paradox and R&D Oligopoly theory says that merger is unprofitable, unless a majority of firms in industry merge. Here, we introduce R&D opportunities to resolve this so-called merger paradox. We have three results. First, when there is one R&D firm, that firm can profitably merge with any number of non-R&D firms. Second, with multiple R&D firms and multiple non-R&D firms, all R&D firms can profitably merge. Third, with two R&D firms and two non-R&D firms, each R&D firms prefer to merge with a non-R&D firm. With three or more than non-R&D firms, however, the R&D firms prefer to merge with each other.

Essays on competition in the pharmaceutical industry

Chapter 1: Patents and Entry Competition in the Pharmaceutical Industry: The Role of Marketing Exclusivity. Effective patent length for innovation drugs is severely curtailed because of extensive efficacy and safety tests required for FDA approval, raising concern over adequacy of incentives for new drug development. The Hatch-Waxman Act extends patent length for new drugs by five years, but also promotes generic entry by simplifying approval procedures and granting 180-day marketing exclusivity to a first generic entrant before the patent expires. In this paper we present a dynamic model to examine the effect of marketing exclusivity. We find that marketing exclusivity may be redundant and its removal may increase generic firms' profits and social welfare. ^ Chapter 2: Why Authorized Generics?: Theoretical and Empirical Investigations Facing generic competition, the brand-name companies some-times launch generic versions themselves called authorized generics. This practice is puzzling. If it is cannibalization, it cannot be profitable. If it is divisionalization, it should be practiced always instead of sometimes. I explain this phenomenon in terms of switching costs in a model in which the incumbent first develops a customer base to ready itself against generic competition later. I show that only sufficiently low switching costs or large market size justifies launch of AGs. I then use prescription drug data to test those results and find support. ^ Chapter 3: The Merger Paradox and R&D Oligopoly theory says that merger is unprofitable, unless a majority of firms in industry merge. Here, we introduce R&D opportunities to resolve this so-called merger paradox. We have three results. First, when there is one R&D firm, that firm can profitably merge with any number of non-R&D firms. Second, with multiple R&D firms and multiple non-R&D firms, all R&D firms can profitably merge. Third, with two R&D firms and two non-R&D firms, each R&D firms prefer to merge with a non-R&D firm. With three or more than non-R&D firms, however, the R&D firms prefer to merge with each other.^

The paradox of transparency : short-termism and the institutionalisation of Australian capital markets

As the ultimate corporate decision-makers, directors have an impact on the investment time horizons of the corporations they govern. How they make investment decisions has been profoundly influenced by the expansion of the investment chain and the increasing concentration of share ownership in institutional hands. By examining agency in light of legal theory, we highlight that the board is in fact sui generis and not an agent of shareholders. Consequently, transparency can lead to directors being 'captured' by institutional investor objectives and timeframes, potentially to the detriment of the corporation as a whole. The counter-intuitive conclusion is that transparency may, under certain conditions, undermine good corporate governance and lead to excessive short-termism.

Relative income, happiness, and utility : an explanation for the Easterlin paradox and other puzzles

The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility, and discuss some nonhappiness research (behavioral, experimental, neurological) related to income comparisons. We last consider how relative income in the utility function can affect economic models of behavior in the domains of consumption, investment, economic growth, savings, taxation, labor supply, wages, and migration.

The speed paradox : the misalignment between driver attitudes and speeding behaviour

This paper reports on a study investigating preferred driving speeds and frequency of speeding of 320 Queensland drivers. Despite growing community concern about speeding and extensive research linking it to road trauma, speeding remains a pervasive, and arguably, socially acceptable behaviour. This presents an apparent paradox regarding the mismatch between beliefs and behaviours, and highlights the necessity to better understand the factors contributing to speeding. Utilising self-reported behaviour and attitudinal measures, results of this study support the notion of a speed paradox. Two thirds of participants agreed that exceeding the limit is not worth the risks nor is it okay to exceed the posted limit. Despite this, more than half (58.4%) of the participants reported a preference to exceed the 100km/hour speed limit, with one third preferring to do so by 10 to 20 km/hour. Further, mean preferred driving speeds on both urban and open roads suggest a perceived enforcement tolerance of 10%, suggesting that posted limits have limited direct influence on speed choice. Factors that significantly predicted the frequency of speeding included: exposure to role models who speed; favourable attitudes to speeding; experiences of punishment avoidance; and the perceived certainty of punishment for speeding. These findings have important policy implications, particularly relating to the use of enforcement tolerances.

Art and the sublime : the paradox of indeterminacy unknowing and (dis)orientation in the presentation of the unpresentable

the (dis)orientation of thought in its encounter with art can be understood as the direct result of an encounter with indeterminacy as a lack in meaning. As an artist I am aware of how this indeterminacy impacts on the perceived value and authority of the artistic voice and in particular its value as a research voice. This paper explores this indeterminacy of meaning, as a profound and disturbing unknowing characteristic of the sublime and argues its value to advanced thought and for any methodological understanding of practice-led research. Lyotard described the sublime as an ‘understanding’ through which art and its associated practices may be able to resist an all too easy assimilation by the public as just a consumer commodity. His thought represents an attempt to both politically and philosophically understand art’s, and particularly abstract painting’s, affect as a state of profound and positive unknowing. To talk of the sublime in art is to speak of the suspension of any comfortable certainty in being and instead to engage with the real as a limit to meaning and knowing. It is to talk of the presentation of the unpresentable as a momentary but significant dissolution of representation. This understanding of the sublime is then further explored through the cultural phenomena of the monochrome painting and applied to the work of the two contemporary artists, Franz Erhard Walter and Günter Umberg. Initially the monochrome was understood as an attempt to go beyond traditional representation and present the unpresentable. In the one hundred years or so since that initial move this understanding has broadened. The monochrome now presents itself as a genre or even project within visual art but it still has much to teach us. In the concretely abstract and performative artworks of Franz Erhard Walter and Günter Umberg, traces of this ambition remain and their work can be seen to pose questions probing our understandings and experiences of artistic meaning, its value and the real.

Re-generating the praxis of academic staff development through arts-based learning : beyond paradox

Effective staff development remains a challenge in higher education. This paper examines the non-traditional methodology of arts-based staff development, its potential to foster transformational learning and the practice of professional artistry, through perceptions of program impact. Over a three year period, eighty academics participated in one metropolitan Australian university’s arts-based academic development program. The methodology used one-on-one hermeneutic-based conversations with fifteen self-selected academics and a focus group with twenty other academics from all three years. The paper presents a learning model to engender academic professional artistry. The findings provide developers with support for using a non-traditional strategy of transformational learning.

Managing the project learning paradox : a set-theoretic approach toward project knowledge transfer

Managing project-based learning is becoming an increasingly important part of project management. This article presents a comparative case study of 12 cases of knowledge transfer between temporary inter-organizational projects and permanent parent organizations. Our set-theoretic analysis of these data yields two major findings. First, a high level of absorptive capacity of the project owner is a necessary condition for successful project knowledge transfer, which implies that the responsibility for knowledge transfer seems to in the first place lie with the project parent organization, not with the project manager. Second, none of the factors are sufficient by themselves. This implies that successful project knowledge transfer is a complex process always involving configurations of multiple factors. We link these implications with the view of projects as complex temporary organizational forms in which successful project managers need to cope with complexity by simultaneously paying attention to both relational and organizational processes.

Adolescent depression and the family : a paradox

Discusses the role of the family in the development, treatment and prevention of adolescent depression. Studies have demonstrated that between 21–32% of adolescents report mild to severe symptoms of depression. The research points out the need for increased attention to adolescent depression because of its high prevalence, the risk factor for the development of other disorders and suicide, recurrence and tendency to endure into adulthood. Many studies have shown a strong relationship between depressive symptomatology and family factors. Therefore, family interventions should play an important role in the prevention and treatment of adolescent depression. However, there exists a paradox in that the research published to date fails to show that family-intervention programs add to the efficacy of treatments provided to the adolescents. Possible explanations for this paradox are discussed.

The 'obesity paradox' in chronic obstructive pulmonary disease

Poor nutritional status in chronic obstructive pulmonary disease (COPD) is associated with increased mortality independently of disease-severity (Collins et al).1 Epidemiological studies have suggested a protective role of obesity against mortality in COPD (Vestbo et al)2 which is contrary to data from the general population where obesity is associated with decreased life expectancy. This relationship has been referred to as the ‘obesity paradox’ and has been demonstrated in a number of chronic wasting conditions (Kalantar-Zadeh et al).3 This study investigated the existence of the obesity paradox in outpatients with COPD by examining the effect of body mass index (BMI) on 1-year healthcare use and clinical outcome in terms of hospital admission rates, length of hospital stay, outpatient appointments and mortality. BMI was assessed in 424 outpatients with COPD, with measurements performed by specialist respiratory nurses during outpatient clinics. 1-year healthcare use was retrospectively collected from the date of BMI measurement. Abstract S163 Table 1 Patients classified as overweight (25.0–29.9 kg/m2) or obese (>30 kg/m2) experienced significantly fewer emergency hospital admissions, as well as a reduced length of hospital stay, in comparison to normal weight (20.0–24.9 kg/m2) or underweight (<20 kg/m2) outpatients. There was a significant negative trend between BMI classification and mortality. This study supports the existence of the ‘obesity paradox’ in COPD, not only in relation to reduced 1 year mortality rates but also in terms of reduced emergency hospital admissions and reduced length of hospital stay.