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Full-Text Articles in Social and Behavioral Sciences
Research Joint Ventures, Product Differentiation, And Price Collusion, Luca Lambertini, Sougata Poddar, Dan Sasaki
Research Joint Ventures, Product Differentiation, And Price Collusion, Luca Lambertini, Sougata Poddar, Dan Sasaki
Economics Faculty Articles and Research
We investigate the interplay between firms’ decisions in product development, either joint or independent, and their ensuing repeated pricing, either collusive or Bertrand–Nash. A joint venture develops a single product, whereas independent ventures develop their respective products which can be differentiated. We prove that joint product development and the resulting lack of horizontal product differentiation may destabilise collusion, whilst firms’ R&D decisions have no bearings on collusive sustainability if differentiation is vertical. We also discover the non-monotone dependence of firms’ venture decisions at the development stage upon their time preferences, as well as upon consumers’ willingness to pay.
A Comparison Of Auctions And Multilateral Negotiations, Charles J. Thomas, Bart J. Wilson
A Comparison Of Auctions And Multilateral Negotiations, Charles J. Thomas, Bart J. Wilson
Economics Faculty Articles and Research
We compare first-price auctions to an exchange process that we term 'multilateral negotiations.' In multilateral negotiations, a buyer solicits price offers for a homogeneous product from sellers with privately known costs, and then plays the sellers off one another to obtain additional price concessions. Using the experimental method, we find that with four sellers, transaction prices are statistically indistinguishable in the two institutions, but with two sellers, prices are higher in multilateral negotiations than in first-price auctions. The institutions are equally efficient with two sellers, but multilateral negotiations are slightly more efficient with four sellers.
The New Basel Capital Accord: Making It Effective With Stronger Market Discipline, Harald Benink, Clas Wihlborg
The New Basel Capital Accord: Making It Effective With Stronger Market Discipline, Harald Benink, Clas Wihlborg
Business Faculty Articles and Research
In January 2001 the Basel Committee on Banking Supervision proposed a new capital adequacy framework to respond to deficiencies in the 1988 Capital Accord on credit risk. The main elements or ‘pillars’ of the proposal are capital requirements based on the internal risk-ratings of individual banks, expanded and active supervision, and information disclosure requirements to enhance market discipline. We discuss the incentive effects of the proposed regulation. In particular, we argue that it provides incentives for banks to develop new ways to evade the intended consequences of the proposed regulation. Supervision alone cannot prevent banks from ‘gaming and manipulation’ of …