scholarly journals Conditional loyalty and its implications for pricing

2021 ◽  
Vol 1 (10) ◽  
Author(s):  
Massimo A. De Francesco
Keyword(s):  
Market Power ◽  
Imperfect Information ◽  
Subgame Perfect Equilibrium ◽  
Price Setting ◽  
Perfect Equilibrium ◽  
Two Stage ◽  
Uniform Price

AbstractBertrand–Edgeworth competition has recently been analyzed under imperfect buyer mobility, as a game in which, once prices are chosen, a static buyer subgame (BS) is played where the buyers choose which seller to visit (see, e.g., Burdett et al. in J Political Econ 109:1060–1085, 2001). Our paper considers a symmetric duopoly where two buyers play a two-stage BS of imperfect information after price setting. An “assessment equilibrium” of the BS is shown to exist in which, with prices at the two firms sufficiently close to each other, the buyers keep loyal if previously served. Conditional loyalty is proved to increase the duopolists’ market power: at the corresponding subgame perfect equilibrium of the entire game, the uniform price is higher than that corresponding to the equilibrium of the BS in which the buyers are persistently randomizing.

Government Positions for Sale - A Model of Grand Corruption

2012 ◽  
Vol 14 (2) ◽  
pp. 1-25 ◽  
Author(s):  
Hans J. Czap ◽  
Kanybek D. Nur-tegin
Keyword(s):  
Developing Countries ◽  
Subgame Perfect Equilibrium ◽  
Backward Induction ◽  
Perfect Equilibrium ◽  
Two Stage ◽  
Stage Game ◽  
The Given

This paper develops a model for a particular type of grand corruption often encountered in developing countries, namely, the sale of government positions by autocratic rulers. A two-stage game is considered, where the autocrat moves first to maximize his revenue from the sale of positions in the cabinet by choosing a price that must be paid by interested politicians. The latter become bureaucrats who maximize their utility from bribe revenues for the given price set by the president. Backward induction yields subgame-perfect equilibrium levels of corruption of the president and bureaucrats. A key insight from this analysis is that conventional tools of fighting corruption become ineffective when corruption at the very top is ignored. The model is distinctive in its treatment of individual moral costs of being corrupt and in its consideration of a revolutionary constraint on the autocrat's choices.

Step-by-Step: The Subgame-Perfect Equilibrium

2020 ◽  
pp. 125-140
Author(s):  
Manfred J. Holler ◽  
Barbara Klose-Ullmann
Keyword(s):  
Subgame Perfect Equilibrium ◽  
Perfect Equilibrium

Uniform Price Auctions with Asymmetric Bidders

2018 ◽  
Vol 19 (1) ◽  
Author(s):  
Sylvain Bourjade
Keyword(s):  
Market Power ◽  
Low Cost ◽  
Uniform Price ◽  
Ex Post ◽  
Increasing Demand

AbstractIn uniform price auctions, multiple prices are sustainable in equilibrium as a result of the market power of bidders. I show that low price equilibria are removed in a framework with asymmetric bidders who cannot anticipate the seller’s rationing strategy. Attracting high cost bidders’ participation in the auction induces the low cost bidders to bid more aggressively in order to eliminate the high cost bidders. Ex-post optimal equilibria with non-increasing demand schedules only exist when the seller is allowed to use any degree of rationing.

Quantifying Commitment in Nash Equilibria

2019 ◽  
Vol 21 (02) ◽  
pp. 1940011
Author(s):  
Thomas A. Weber
Keyword(s):  
Nash Equilibrium ◽  
Normal Form ◽  
Nash Equilibria ◽  
Dynamic Game ◽  
Subgame Perfect Equilibrium ◽  
Canonical Extension ◽  
Perfect Equilibrium ◽  
Form Game ◽  
Normal Form Game ◽  
The Given

To quantify a player’s commitment in a given Nash equilibrium of a finite dynamic game, we map the corresponding normal-form game to a “canonical extension,” which allows each player to adjust his or her move with a certain probability. The commitment measure relates to the average overall adjustment probabilities for which the given Nash equilibrium can be implemented as a subgame-perfect equilibrium in the canonical extension.

Fashioning Luxury for Factory Girls: American Jewelry, 1860–1914

2011 ◽  
Vol 85 (2) ◽  
pp. 295-317 ◽  
Author(s):  
Francesca Carnevali
Keyword(s):  
Nineteenth Century ◽  
Market Power ◽  
Imperfect Information ◽  
Creative Destruction ◽  
Entrepreneurial Activity ◽  
Capitalist Economy ◽  
Labor Skills

The production of jewelry offers a lens through which to examine the nature of creativity in a capitalist economy. The fashioning of decorative goods for wider sections of society in the second half of the nineteenth century allowed manufacturers to expand the size of their businesses, but only by sustaining strong connections with consumers and keeping track of buyers' changing desires. The outcomes of decisions affecting their enterprises were determined by the degree to which producers understood what their customers wanted. Entrepreneurial activity was critical to the formation of strategies for coping with the problem of scarce or imperfect information and limited market power. These strategies induced a process of creative destruction, whereby old ways of making things changed, and technology, labor, skills, and capital were recombined.

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