scholarly journals Characteristic Function and Time Consistency for Two-Stage Games with Network Externalities

Mathematics ◽  
2020 ◽  
Vol 8 (1) ◽  
pp. 38
Author(s):  
Artem Sedakov

Time consistency is a property of the solution to a cooperative dynamic game which guarantees that this solution remains stable with respect to its revision by players over time. The fulfillment of this property is directly related to the characteristic function and its behavior with the course of the game as any solution is based on this function. In this paper, we will examine the characteristic functions for two economic models with network externalities represented by a two-stage network game using the theory developed for this class of games. For a network game with positive externalities represented by a public goods provision model, we demonstrate a sufficient condition for time consistency. For a network game with negative externalities represented by a market competition model, we show that the cooperative solution is always time consistent.

2016 ◽  
Vol 106 (5) ◽  
pp. 83-88 ◽  
Author(s):  
Michael Kremer ◽  
Jack Willis

Dynamically and statically optimal Pigouvian subsidies and taxes on durables will differ in a growing economy. In a dynamic game, consumers may delay purchasing durables with positive externalities, such as latrines, anticipating greater future subsidies. Governments can most cheaply induce optimal purchasing by commiting to make subsidies temporary. Foreign donors may make commitment impossible, generating delays in private investment that more than fully offset the social benefits of transfers. Anticipated future taxes or regulation of durables with negative externalities, such as guns, may encourage current purchase, potentially causing policymakers who would otherwise prefer taxes or regulation to abandon such policies.


2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Stephan Brenner ◽  
Caterina Favaretti ◽  
Julia Lohmann ◽  
Jobiba Chinkhumba ◽  
Adamson S. Muula ◽  
...  

Abstract Background Countries in Africa progressively implement performance-based financing schemes to improve the quality of care provided by maternal, newborn and child health services. Beyond its direct effects on service provision, evidence suggests that performance-based financing can also generate positive externalities on service utilization, such as increased use of those services that reached higher quality standards after effective scheme implementation. Little, however, is known about externalities generated within non-incentivized health services, such as positive or negative effects on the quality of services within the continuum of maternal care. Methods We explored whether a performance-based financing scheme in Malawi designed to improve the quality of childbirth service provision resulted positive or negative externalities on the quality of non-targeted antenatal care provision. This non-randomized controlled pre-post-test study followed the phased enrolment of facilities into a performance-based financing scheme across four districts over a two-year period. Effects of the scheme were assessed by various composite scores measuring facilities’ readiness to provide quality antenatal care, as well as the quality of screening, prevention, and education processes offered during observed antenatal care consultations. Results Our study did not identify any statistically significant effects on the quality of ANC provision attributable to the implemented performance-based financing scheme. Our findings therefore suggest not only the absence of positive externalities, but also the absence of any negative externalities generated within antenatal care service provision as a result of the scheme implementation in Malawi. Conclusions Prior research has shown that the Malawian performance-based financing scheme was sufficiently effective to improve the quality of incentivized childbirth service provision. Our findings further indicate that scheme implementation did not affect the quality of non-incentivized but clinically related antenatal care services. While no positive externalities could be identified, we also did not observe any negative externalities attributable to the scheme’s implementation. While performance-based incentives might be successful in improving targeted health care processes, they have limited potential in producing externalities – neither positive nor negative – on the provision quality of related non-incentivized services.


2012 ◽  
Vol 28 (4) ◽  
pp. 925-932 ◽  
Author(s):  
Kirill Evdokimov ◽  
Halbert White

This note demonstrates that the conditions of Kotlarski’s (1967, Pacific Journal of Mathematics 20(1), 69–76) lemma can be substantially relaxed. In particular, the condition that the characteristic functions of M, U1, and U2 are nonvanishing can be replaced with much weaker conditions: The characteristic function of U1 can be allowed to have real zeros, as long as the derivative of its characteristic function at those points is not also zero; that of U2 can have an isolated number of zeros; and that of M need satisfy no restrictions on its zeros. We also show that Kotlarski’s lemma holds when the tails of U1 are no thicker than exponential, regardless of the zeros of the characteristic functions of U1, U2, or M.


2015 ◽  
Vol 10 (2) ◽  
Author(s):  
Jonathan P. Caulkins

AbstractInternational prohibitions create asymmetries; production and transshipment concentrate in relatively few places that bear the bulk of the negative externalities created by the illegal trade. These externalities fuel calls for altering the United Nations treaty framework and for individual nations to legalize outside of the framework. Analyses of the pros and cons of legalization usually adopt the perspective of a single nation acting in isolation. However, one nation’s legalization alters incentives for others to act, and not always in obvious ways. So the proper perspective is that of a dynamic game.The primary contribution of this paper is to make the case for analyzing legalization as a strategic game, but it also offers preliminary analysis for the case of cocaine. Tentative conclusions include:


2021 ◽  
Vol 2021 (2) ◽  
pp. 86-94
Author(s):  
Dmytro V. Kozlov

The problems of research of internalities and externalities with the further development of the general classification of externalities of economic activity of the enterprise are defined. The influence of negative and positive externalities on society and enterprise is considered. The concept of negative externalities differs from transaction costs. It is noted that transaction costs can be reflected in cash and can be offset by market inclusion in the price of the products, but this is not possible for externalities. It is emphasized that the purpose of economic activity of any enterprise is to exceed the positive externalities over the negative and achieve the maximum difference between them. The different time duration of the impact of the enterprise on third parties is given. The sign of externalities on the scale of action is emphasized. The externalities of the enterprise are considered in their essence according to the principles of sustainable development, highlighting economic, social and environmental externalities. It is emphasized that economic externalities can arise in the course of the whole business cycle of full-fledged work of all parts of the enterprise. In contrast to economic, social externalities affect people both within the enterprise, that is workers and citizens of the society in which the enterprise operates. And when it comes to environmental externalities, the mediator between the source and recipient of externalities is the environment. Externalities are distinguished according to the means of accounting and the degree of influence on the subject of perception. The necessity of regulation of externalities through internalization and actions of the enterprise with the help of state and market instruments is substantiated. It is emphasized that internalization is the transformation of negative externalities into positive ones in terms of convergence of marginal costs and benefits of the enterprise to marginal social costs and utility.


1954 ◽  
Vol 6 ◽  
pp. 186-189 ◽  
Author(s):  
Eugene Lukacs ◽  
Otto Szász

In an earlier paper (1), published in this journal, a necessary condition was given which the reciprocal of a polynomial without multiple roots must satisfy in order to be a characteristic function. This condition is, however, valid for a wider class of functions since it can be shown (2, theorem 2 and corollary to theorem 3) that it holds for all analytic characteristic functions. The proof given in (1) is elementary and has some methodological interest since it avoids the use of theorems on singularities of Laplace transforms. Moreover the method used in (1) yields some additional necessary conditions which were not given in (1) and which do not seem to follow easily from the properties of analytic characteristic functions.


Author(s):  
Rafał Baum ◽  
Magdalena Kozera-Kowalska

EU agricultural and agrienvironmental policies design is to improve the provision of environmental public goods and positive externalities (or to reduce negative externalities). In turn, the comprehensive identification and analysis of agricultural external economies involve a need for developing a dedicated valuation methodology. The aim of the article is to review methods of valuation of farm agritourism and an attempt to evaluate the farm’s agrotourism value (based on a case study). Considerations were based on a study of scientific literature and own research. The study focuses on presenting valuation methods for external economies, and proposes a methodology for the valuation of some illustrative positive externalities of agricultural production and of natural environmental resources regarded as public goods. The novelty of the analysis concerns its approach - a transition from theoretical considerations to the operationalization of the problem – the article presents a sample of valuation of the agri-tourism value of a farm, defined as the value of a specific location resulting from the natural beauty of the landscape and leisure services produced by environmental assets. Research (surveys among tourists) was carried out in the selected farm located, in a small village by the Baltic Sea, on the outskirts of a National Park. Analysis of the results indicate that landscape features associated with agricultural activities positively influence the demand for rural tourism. The value estimated by the Travel Cost Method (TCM) amounted to PLN 3,767,325 (approx. EUR 876 thousand). The amount shows the importance of externalities generated by the farm.


2019 ◽  
Vol 7 (7) ◽  
pp. 287-296
Author(s):  
Li-Hsing Ho ◽  
Alang Manglavan ◽  
Chung-Cheng Fu

The model for updating marginal cost pricing by overall equipment effectiveness (OEE) indexes as well as P*A*Q under existing market tough competition. Motivation/Background: When production capacity is constant and the AC curve is higher than the MC curve, AC pricing can be employed. Because of market competition, businesses producing in small quantities and low diversity use MC pricing. To reduce the risk to profit, a novel cost pricing mechanism can be adopted by using the unit DC of MC to correspond to the OEE under Areeda-Turner Rule. Method: The correspondence of the OEE with the unit direct cost (DC) is deduced and verified in this paper by calculating the quotient found by dividing the OEE indexes by unit DC as conditional as Bill of Material (BOM) cost. Results: Research findings revealed a positive alert for timely updating pricing between average cost (AC) pricing and marginal cost (MC) pricing. Conclusions: This approach reflects the dynamic game in a timely manner. The OEE comprises the performance, availability, and quality indexes. These three indexes reconcile the unit DC pricing, and using MC in optimization of marginal revenue (MR). In practice, shop floor management measures key indexes of idleness and loss; the objective is to eliminate laggard and static pricing problem. This realizes dynamic examination of cost difference of the BOM cost pool. One case study is employed to explain the MC pricing strategy in industry.


2012 ◽  
Vol 6 (3-4) ◽  
pp. 71-82 ◽  
Author(s):  
Danilo Bertoni ◽  
Alessandro Olper

The paper deals with the political and economic determinants of EU agri-environmental measures (AEMs) applied by 59 regional/country units, during the 2001-2004 period. Five different groups of determinants, spanning from positive and negative externalities, to political institutions, are highlighted and tested using an econometric model. Main results show that AEMs implementation is mostly affected by the strength of the farm lobby, and the demand for positive externalities. At the same time it emerges a prominent role played by political institutions. On the contrary, AEMs do not seem implemented by the willingness to address negative externalities.


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