Stackelberg leader in a collective action model

Within a mathematical modelling framework, we analyze the conditions allowing a self-governedcollective to achieve Stackelberg equilibrium. It is assumed that members of the collective generate common income through individual effort, which income is then distributed among all members of the collective according to their predetermined share. Effort invested by each agent wields (imposes) a positive influence on the marginal income resulting from the effort invested by any other agent. Each member of the collective aims to maximize their individual gain. Within a model built on the most general principles, it is shown that a Stackelberg equilibrium outcome is preferable over Nash equilibrium. The model, utilizing the special case of income function and private costs functions; helps identify the correlation between the agents’ efforts and their individual characteristics such as the agent’s share in the income, income elasticity by effort, and subjective valuation of private costs. It is shown that additional income generatedby the move (transition) from Nash to Stackelberg equilibrium depends only on the elasticity of income vs. the leader’s effort, and the sum of elasticity indexes for all members of the collective. We introduce the definition and the conditions for the existence of a distinctive agent, who acts as a Stackelberg leader and ensures maximum individual gain for each member of the collective (including their own). The absence of a distinctive agent in a collective gives rise to the Stackelberg leadership problem, as each member of the collective is only able to obtain maximum gains when acting as a follower.

Overconfidence and Timing of Entry

We analyze the impact of overconfidence on the timing of entry in markets, profits, and welfare using an extension of the quantity commitment game. Players have private information about costs, one player is overconfident, and the other one rational. We find that for slight levels of overconfidence and intermediate cost asymmetries, there is a unique cost-dependent equilibrium where the overconfident player has a higher ex-ante probability of being the Stackelberg leader. Overconfidence lowers the profit of the rational player but can increase that of the overconfident player. Consumer rents increase with overconfidence while producer rents decrease which leads to an ambiguous welfare effect.

Modelling cooperative advertising decisions in a manufacturer-distributor-retailer supply chain using game theory

This work considers cooperative advertising decisions in a manufacturer-distributor-retailer supply chain, where the manufacturer is taken as the Stackelberg leader, using differential game theory. The distributor and retailer are the first and the second followers, respectively. We introduce the distributor into the traditional manufacturer-retailer channel through his direct involvement in advertising as being incorporated into the non-stochastic Sethi's sales-advertising dynamics. This is used to model the awareness share dynamics in which the distributor and the retailer directly engage in advertising, while the manufacturer bypasses the distributor to subsidise only the retail advertising effort. We consider a subsidised and unsubsidised channel structures, where each structure results in a system of three nonlinear equations, which cannot be solved analytically, but only numerically. However, we show that the unique solution to each of the systems exists, provided certain conditions are satisfied. The distributor and the retailer's advertising strategies are developed for both when subsidy is provided and when it is not provided. We also obtain the manufacturer's subsidy rate and the market awareness share for both when retail advertising is subsidised and when it is not subsidised. We observe that with the provision of subsidy, the distributor reduces his advertising effort. However, the resulting increase in the retail advertising effort is larger than the reduction in the distributor's advertising commitment, thus making the channel advertising effort larger with subsidy. It further shows that to avoid being shortchanged, each player should adopt only his optimal strategy or strategies as the case may be.

Two-period pricing strategies in a two-echelon supply chain with conspicuous consumption

This paper investigates the problem of pricing strategies in a two-echelon supply chain with conspicuous consumers. We develop a two-period pricing model for the supply chain which is consisted of one manufacturer and one retailer who involve in trading a single product. The manufacturer being a Stackelberg leader, decides the wholesale price, the retailer acts as a follower and sets the selling price. As a leader, the manufacturer has two pricing options: (1) sets a common wholesale price for the entire selling season; (2) sets two different wholesale prices for the two selling periods respectively. Based on the manufacturer’s pricing options, we develop four pricing cases considering the effect of conspicuous consumption and compare the equilibrium outcomes. In addition, we study the impacts of the main parameters on the equilibrium results under different cases in the numerical study and obtain some managerial insights.

Improving Quality of Business in Next Generation Telecom Networks

Quality of business (QoBiz) is an important aspect of providing quality of telecommunication services that is being increasingly used in the pursuit of better business. It covers financial aspects of service provisioning, which is firmly related to service provider (SP) revenue and profit. In next generation network (NGN), relation between pure technical aspects (i.e., quality of service [QoS] and QoBiz) tend to be dynamic with pricing as an important tool for adjusting users' demand to network congestion, thus allowing a SP to maximize his revenue. This chapter aims to investigate and provide new possibilities for SPs to enhance their revenues using responsive pricing scheme for charging end users in NGN. Interaction of a SP and user is defined as a Stackelberg leader-follower game with provider acting as the leader and users acting as followers.

Improving Quality of Business in Next Generation Telecom Networks

Quality of business (QoBiz) is an important aspect of providing quality of telecommunication services that is being increasingly used in the pursuit of better business. It covers financial aspects of service provisioning, which is firmly related to service provider (SP) revenue and profit. In next generation network (NGN) relation between pure technical aspects, i.e. quality of service (QoS) and QoBiz tend to be dynamic with pricing as an important tool for adjusting users' demand to network congestion, thus allowing a SP to maximize his revenue. This chapter aims to investigate and provide new possibilities for SPs to enhance their revenues using responsive pricing scheme for charging end users in NGN. Interaction of a SP and user is defined as a Stackelberg leader-follower game with provider acting as the leader and users acting as followers.

Modeling dynamic cooperative advertising in a decentralized channel

This work deals with cooperative advertising in a manufacturer-retailer supply channel using differential game theory. It considers the manufacturer as the Stackelberg leader and the retailer as the follower. It incorporates the manufacturer?s advertising effort into Sethi?s sales-advertising dynamics, and considers its effect on the retail advertising effort, the awareness share, the players? payoffs, and the channel payoff. These are achieved by considering two channel structures: a situation where retail advertising is subsidized, and a situation where it is not. In both situations, it obtains the Stackelberg equilibrium, which characterizes the effects of the manufacturer?s advertising effort, including the relationships between the manufacturer?s advertising effort and the retailer?s advertising effort. The work shows that the direct involvement of the manufacturer in advertising is worthwhile.

Application of Game Theory for Network Recovery After Large-Scale Disasters

In recent years, large-scale disasters took place frequently and always caused severe damages to the network infrastructures. Due to these damages, available network resources are usually not sufficient to meet the data transmission requirements of users after disasters. Moreover, users tend to behave selfishly by consuming as much network resources as possible. Incentive mechanisms are therefore essential for the users to voluntarily cooperate with each other and improve the system performance. In commercial networks, this can be efficiently achieved through pricing. Namely, by selecting an appropriate pricing policy, it is able to incentivize users to choose the service that best matches their data transmission demands. In this chapter, assuming that a time-dependent pricing scheme is imposed on network users, a Stackelberg leader-follower game is then formulated to study the joint utility optimization problem of the users in a disaster region subject to maximum delay and storage constrains. The equilibrium for the Stackelberg leader-follower game is also investigated.