Is Voting for a Cartel a Sign of Cooperativeness?

This paper tests the hypothesis that a (partial) reason why cartels—collective but costly and non-binding price agreements—lead to higher prices in a Bertrand oligopoly could be because of a selection effect: decision-makers who are willing to form price agreements are more likely to be less competitive and pick higher prices in general. To test this hypothesis we run an experiment where participants play two consecutive Bertrand pricing games: first a standard version without the opportunity to form agreements; followed by a version where participants can vote whether to have a (costly) non-binding agreement as a group to pick the highest number. We find no statistically significant difference between the numbers picked in the first game by participants who vote for and against an agreement in the second game. We do confirm that having a non-binding agreement to cooperate leads to higher numbers being picked on average. Both participants who voted for and against the agreement increase the number they pick in situations with an agreement. However, this effect is bigger for participants who voted in favour.

Strategic environmental policy and international market share rivalry under differentiated Bertrand oligopoly

We analyse strategic environmental policies under international Bertrand oligopoly when firms in different industries, located in different countries, produce differentiated products. Under cooperation, emission prices always exceed the joint marginal damage from pollution. Under non-cooperation, internationally nontradable and tradable emission permit prices are always higher than the domestic marginal damage from emissions (the Pigovian tax); emission taxes can also exceed the Pigovian tax. The non-cooperative emission prices under all instruments can exceed the joint pollution damage. Internationally tradable permits generate outcomes closest to cooperation — they result in the lowest pollution and the highest welfare among all instruments under non-cooperation. Pollution is the highest and welfare the lowest with taxes. Our results provide support for allowing international trade in emission permits even when governments choose their permit levels non-cooperatively.

The Core in Bertrand Oligopoly TU-Games with Transferable Technologies

In this article we study Bertrand oligopoly TU-games with transferable technologies under the α and β-approaches. We first prove that the core of any game can be partially characterized by associating a Bertrand oligopoly TU-game derived from the most efficient technology. Such a game turns to be an efficient convex cover of the original one. This result implies that the core is non-empty and contains a subset of payoff vectors with a symmetric geometric structure easy to compute. We also deduce from this result that the equal division solution is a core selector satisfying the coalitional monotonicity property on this set of games. Moreover, although the convexity property does not always hold even for standard Bertrand oligopolies, we show that it is satisfied when the difference between the marginal cost of the most efficient firm and the one of the least efficient firm is not too large.

Bertrand Oligopoly Competition in Composite Web Service Network

Because of its heterogeneous nature, a web service can be composed of multiple composite web services. To improve profitability in the software-component economy, software as a service (SaaS) service providers compete more at the composite-service level than at the single-service level. Moreover, because of the collaborative environment, composite web service networks determine both the applicability of the web service and its expected economic behavior. Based on the traditional linear demand model, this article presents a congestion-aware demand model that makes several assumptions regarding the SaaS service marketplace. Then, it formulates the SaaS service providers' pricing behaviors as a network Bertrand oligopoly competition. Key game-theoretic analysis includes the existence and uniqueness of the pure strategy Nash equilibrium. Moreover, this article provides one sufficient condition, where if all SaaS service providers follow the best response strategy, the strategy profile converges to the unique pure strategy Nash equilibrium.

Voting For a Cartel as a Sign of Cooperativeness

This paper tests the hypothesis that a (partial) reason why cartels – costly non-binding price agreements – lead to higher prices in Bertrand Pricing Game-experiments could be because participants who form these kinds of agreements are more cooperative and pick higher numbers in general. To test this hypothesis we run an experiment where participants play two consecutive Bertrand oligopoly games: first a standard version without the opportunity to make price agreements; followed by a version where participants can vote, by majority, on whether to have a costly nonbinding agreement to pick the highest number. We find no statistically significant difference between the numbers picked in the first game by participants who vote for and against an agreement in the second game. We do confirm that having a price agreement leads to higher numbers being picked on average. Additionally we find that participants who vote for or against the price-agreement behave differently in response to the existence of the price agreement. In particular, participants who vote for a price agreement react more positively to the price agreement. The difference in numbers picked in the second game between situations with and without a price agreement is larger for participants who voted in favour of the agreement. Voters who voted for the price agreement are more cooperative than voters who voted against but only in situations where there is a price agreement.

DYNAMIC ANALYSIS FOR BERTRAND COMPETITION MODEL WITH EXPONENTIAL FORM∗

This paper will consider a nonliear system of difference equations which describes a qualitative study of Bertrand oligopoly games with two boundedly rational players. With nonlinear demand function of exponential form, the local stability of equilibria and the global convergence of positive solutions for the dynamical system are analyzed.

Bertrand Oligopoly with Boundedly Rational Consumers

In this paper we consider a model of Bertrand oligopoly when consumers are boundedly rational and make their purchase decisions probabilistically, according to the Luce model. We consider three different cases: first, we characterize equilibrium when firms face boundedly rational consumers with the fixed irrationality parameter

Multi-product Bertrand Oligopoly with Exogenous and Endogenous Consumer Heterogeneity

We develop a spatial model in which consumers receive firm-specific location shocks and firms endogenously determine both franchise/product locations and prices. Remarkably, firms fail to profit from endogenous product-specific heterogeneity alone: while ex-post consumer heterogeneity ensures positive gross profits, competition for market share results in socially excessive product lines and zero net profits. With added exogenous taste heterogeneity, endogenous spatial heterogeneity drives profits below their levels with only taste heterogeneity. Finally, we introduce multiple product lines and show that when product costs differ across lines, firms earn positive profits as long as consumer preferences over lines are imperfectly correlated.