In this paper, we integrate the bargaining theory with the problem of regulating a natural monopoly under symmetric information or asymmetric information with complete ignorance. We prove that the ...unregulated payoffs under symmetric information and the optimally regulated payoffs under asymmetric information define a pair of bargaining sets which are dual to (reflections of) each other. Thanks to this duality, the bargaining solution under asymmetric information can be obtained from the solution under symmetric information by permuting the implied payoffs of the monopolist and consumers provided that the bargaining rule satisfies anonymity and homogeneity. We also show that under symmetric (asymmetric) information the bargaining payoffs (permuted payoffs) obtained under the Egalitarian, Nash, and Kalai–Smorodinsky rules are equivalent to the Cournot–Nash payoffs of unregulated symmetric oligopolies, involving two, three, and four firms, respectively. Moreover, we characterize two bargaining rules using, in addition to (weak or strong) Pareto optimality, several new axioms that depend only on the essentials of the regulation problem.
Abstract
This article investigates how a privately informed seller could signal her type through Bayesian persuasion and pricing strategy. We find that it is generally impossible to achieve ...separation through one channel alone. Furthermore, the outcome that survives the intuitive criterion always exists and is unique. This outcome is separating, for which a closed-form solution is provided. The signalling concern forces the high-type seller to disclose inefficiently more information and charge a higher price, resulting in fewer sales and lower profit. Finally, we show that a regulation on minimal quality could potentially hurt social welfare, and private information hurts the seller.
This paper analyzes a bilateral trade model where the buyer's valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to ...the buyer. Our goal is to characterize those signal structures which maximize the buyer's expected payoff. We identify a buyer-optimal signal structure which generates (i) efficient trade and (ii) a unitelastic demand. Furthermore, we show that every other buyer-optimal signal structure yields the same outcome as the one we identify: in particular, the same price.
In this paper, we study a family of sales-based rebate mechanisms as an effective tool to implement price discrimination across a population of buyers with correlated heterogeneous valuations on ...indivisible goods and services. In order to implement such sales-based rebate mechanisms, the seller charges each buyer a fixed price at the time of purchase contingent on a rebate that is a function of the ex post sales volume to be realized at the end of the sales period. The seller declares both a price and a menu of rebates as a function of sales. We show that, when there is a common component of uncertainty in consumers’ valuations (to which we refer as the quality of the product), such rebates enable a seller to effectively induce different expected net prices at different valuations. Importantly, this effective price discrimination over valuations is achieved keeping both the base price and the rebate uniform across all buyers. This uniformity of price and rebate across buyers is a key advantage of our proposed rebate mechanism, thereby providing a new mechanism for price discrimination in crowd-based markets. We use tools and techniques from game theory and variational optimization to provide insight into the economics of such mechanisms. In particular, we identify two mechanisms that are monotone functions of the sales volume that are easy to implement in practice and perform well when compared with the much more complex optimal mechanism. We provide a rigorous analysis of the optimal mechanism and discuss practical limitations in implementing the globally optimal design, further demonstrating the efficacy of our proposed monotone mechanisms.
This paper was accepted by Gabriel Weintraub, revenue management and market analytics.
Funding:
This research was supported by a Vannevar Bush Fellowship from the Office of Secretary of State and Army Research Office MURI Project W911NF-19-1-0217.
Supplemental Material:
The data files are available at
https://doi.org/10.1287/mnsc.2023.4691
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Is there really a green paradox? van der Ploeg, Frederick; Withagen, Cees
Journal of environmental economics and management,
11/2012, Letnik:
64, Številka:
3
Journal Article
Recenzirano
Odprti dostop
In the absence of a CO2 tax, the anticipation of a cheaper renewable backstop increases current emissions of CO2. Since the date at which renewables are phased in is brought forward and more ...generally future emissions of CO2 will decrease, the effect on global warming is unclear. Green welfare falls if the backstop is relatively expensive and full exhaustion of fossil fuels is optimal, but may increase if the backstop is sufficiently cheap relative to the cost of extracting the last drop of fossil fuels plus marginal global warming damages as then it is attractive to leave more fossil fuels unexploited and thus limit CO2 emissions. We establish these results by analyzing depletion of non-renewable fossil fuels followed by a switch to a clean renewable backstop, paying attention to timing of the switch and the amount of fossil fuels remaining unexploited. We also discuss the potential for limit pricing when the non-renewable resource is owned by a monopolist. Finally, we show that if backstops are already used and more backstops become economically viable as the price of fossil fuels rises, a lower cost of the backstop will either postpone fossil fuel exhaustion or leave more fossil fuel in situ, thus boosting green welfare. However, if a market economy does not internalize global warming externalities and renewables have not kicked in yet, full exhaustion of fossil fuel will occur in finite time and a backstop subsidy always curbs green welfare.
Cette étude analyse l’existence d’une concurrence en prix sur le marché des médicaments non remboursables, dans un cadre de monopole officinal en France. À partir de données de prix mensuelles pour ...trente médicaments pour un échantillon de 4 700 pharmacies, entre 2006 et 2008, le niveau des prix est comparé selon le degré de concurrence dans l’environnement proche de la pharmacie, mesurée à partir d’un indicateur fin de densité communale. Les résultats indiquent que la concurrence s’exerce très peu sur ce segment de marché. Alors que le degré de concurrence est très variable entre les pharmacies, la plupart d’entre elles vendent au même prix. Ces résultats interrogent sur les effets d’une ouverture de ce marché à de nouveaux entrants, au regard des expériences étrangères.
Policies to correct market power and selection can be misguided when these forces coexist. We build a model of symmetric imperfect competition in selection markets that parameterizes the degree of ...market power and selection. We use graphical price-theoretic reasoning to characterize the interaction between these forces. Using a calibrated model of health insurance, we show that the risk adjustment commonly used to offset adverse selection can reduce coverage and social surplus. Conversely, in a calibrated model of subprime auto lending, realistic levels of competition can generate an oversupply of credit, implying that greater market power is desirable.
The Internet has increased the flexibility of retailers, allowing them to operate an online arm in addition to their physical stores. The online channel offers potential benefits in selling to ...customer segments that value the convenience of online shopping, but it also raises new challenges. These include the higher likelihood of costly product returns when customers' ability to "touch and feel" products is important in determining fit. We study competing retailers that can operate dual channels ("bricks and clicks") and examine how pricing strategies and physical store assistance levels change as a result of the additional Internet outlet. A central result we obtain is that when differentiation among competing retailers is not too high, having an online channel can actually increase investment in store assistance levels (e.g., greater shelf display, more-qualified sales staff, floor samples) and decrease profits. Consequently, when the decision to open an Internet channel is endogenized, there can exist an asymmetric equilibrium where only one retailer elects to operate an online arm but earns lower profits than its bricks-only rival. We also characterize equilibria where firms open an online channel, even though consumers only use it for research and learning purposes but buy in stores. A number of extensions are discussed, including retail settings where firms carry multiple product categories, shipping and handling costs, and the role of store assistance in impacting consumer perceived benefits.
This paper presents a general analysis of the effects of monopolistic third-degree price discrimination on welfare and output when all markets are served. Sufficient conditions—involving ...straightforward comparisons of the curvatures of the direct and inverse demand functions in the different markets—are presented for discrimination to have negative or positive effects on social welfare and output.
Recently, interactions between putative axions and magnetic monopoles have been revisited by two of the authors.1 It is shown that significant modifications to conventional axion electrodynamics ...arise due to these interactions, so that the axion–photon coupling parameter space is expanded from one parameter gaγγ$g_{a\gamma \gamma }$ to three (gaγγ,gaAB,gaBB)$(g_{a\gamma \gamma },g_{aAB},g_{aBB})$. Poynting theorem is implemented to determine how to exhibit sensitivity to gaAB$g_{aAB}$ and gaBB$g_{aBB}$ using resonant haloscopes, allowing new techniques to search for axions and a possible indirect way to determine if magnetically charged matter exists.
The axion is a well‐motivated particle, which can also explain the existence of dark matter. Furthermore, if magnetic monopoles exist, interactions of electromagnetic fields with axions will be expanded from one parameter to three. In this article, new ways to search for axions are determined and a possible indirect way to determine if magnetically charged matter exists are discussed.
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