Model Of Dynamic Competition Research Articles

Global properties of symmetric competition models with riddling and blowout phenomena

In this paper the problem of chaos synchronization, and the related phenomena of riddling, blowout and on–off intermittency, are considered for discrete time competition models with identical competitors. The global properties which determine the different effects of riddling and blowout bifurcations are studied by the method of critical curves, a tool for the study of the global dynamical properties of two‐dimensional noninvertible maps. These techniques are applied to the study of a dynamic market‐share competition model.

A dynamic model of Bertrand competition with entry

This paper analyzes a simple, repeated game of simultaneous entry and pricing. We report a surprising property of the symmetric equilibrium solution: If the number of potential competitors is increased above two, the market breaks down with higher probability, and the competitive outcome becomes less likely. More potential competition lowers welfare – another Bertrand paradox. The model can also be applied to auctions to explore whether a revenue maximizing auctioneer should restrict the number of bidders if bidder participation is costly.

Simulation Study of Competition between Two Types of Microorganisms with Antagonistic Relationships in a Completely Mixed Reactor.

A simple dynamic model of competition between two types of microorganisms, one of which produces an inhibitory substance in an ideal chemostat, was developed to study the survival mechanism of an exogenous microbial strain introduced into an ecosystem possessing antagonistic activity against it. Numerical simulations of the model were carried out in 12 cases depending on the disposition of the growth rate curves of the two types of microorganisms and on the sensitivity of the microorganisms against the inhibitory substance. From the results, it was demonstrated that production of an inhibitory substance gives its producer a chance to exclude the competitor under conditions in which the producer would be otherwise excluded by the competitor. It was also found that production of a substance which is inhibitory not only against the competitor but also against the producer itself (autoinhibitory) allows the two microbial strains to coexist under conditions in which the competitor would otherwise be excluded. It was suggested that production of some inhibitory substances and tolerance to such substances are desirable characteristics for exogenous microorganisms to survive in microbial ecosystems, and a large inoculum density of exogenous microorganisms has a positive effect on their survival rate in some cases.

Fiscal Policy Multipliers: The Role of Monopolistic Competition, Scale Economies, and Intertemporal Substitution in Labour Supply

A dynamic macroeconomic model of monopolistic competition is developed for the closed economy. Forward looking consumers demand differentiated goods, supply labour, and save part of their income in the form of shares. Producers manufacture the differentiated goods by using labour and capital. We study the short-run, transition, and long-run effects of fiscal policy. Comparisons with the New Classical case of perfect competition are made. Simple expressions far multipliers are derived. The sensitivity of the multipliers for diversity preference and Ethier productivity effects, intratemporal and intertemporal substitution effects, and markup effects under free and restricted entry are also studied.

Negativity Effect in Multiparty Electoral Competition

We construct a dynamic voting model of multiparty competition in order to capture the following facts: voters base their decision on past economic performance of the parties, and parties and candidates have different objectives. This model may explain the emergence of parties' ideologies, and shows the compatibility of the different objectives of parties and candidates. Together, these results give rise to the formation of political parties, as infinetely-lived agents with a certain ideology, out of the competition of myopic candidates freely choosing policy positions. We also show that in multicandidate elections held under the plurality system, Hotelling's principle of minimum differentiation is no longer satisfied.

Manipulation of Competitive Growth for Particle Size Control in Emulsion Polymerization

The utility of the growth mechanism to influence relative particle growth is investigated in a semi-batch reactor. A dynamic competitive growth model is developed and used to simulate the growth of two monodisperse polystyrene particle populations (bidisperse system) at 50 °C. Validation of the model with on-line density and on-line particle diameter measurements demonstrates that radical absorption into particles is more likely to occur by a collision mechanism than either by a propagation or diffusion mechanism. Experimental and simulation results show that relative narrowing of the bidisperse system increases as the weight fraction polymer inside the particles (W p ) decreases. It is concluded that the ability to alter W p in a semi-batch reactor makes this mode of operation attractive for particle size distribution control.

The Learning Curve, Predation, Antitrust, and Welfare

An economic definition of predation is applied to a dynamic model of duopoly competition with learning curves. It is shown that rational predation occurs in equilibrium, although below‐cost pricing is neither a necessary nor a sufficient indicator of predation. A conceptual framework for antitrust analysis of predation shows that a prohibition of predation might help or harm consumer welfare depending on details of market structure, although the informational requirements of fashioning an effective legal rule against harmful predation are formidable.

Negativity Effect and the Emergence of Ideologies

`Negativity effect' refers to the psychological phenomenon that people tend to attach greater weight to negative information than to equally extreme and equally likely positive information in a variety of information-processing tasks. Numerous studies of impression formation have found that negative information is weighted more heavily than positive information as impressions of others are formed. There is empirical evidence in political science that shows the importance of the negativity effect in the information processing of the voters. This effect can explain the observed decrease in popularity of a president the longer he is in office. We construct a dynamic model of political competition, incorporating the negativity effect in the decision rule of the voters and allowing their preferences to change over time, according to the past performance of the candidates while in office. Our model may explain the emergence of ideologies out of the competition for votes of myopic candidates freely choosing policy positions. This result gives rise to the formation of political parties, as infinitely-lived agents with a certain ideology. Furthermore, in this model some voters may start out by switching among parties associated with different policies, but find themselves supporting one of the parties from some point on. Thus, the model describes a process by which some voters become identified with a `right' or `left' bloc, while others `swing' between the two parties.

A Dynamic Model of Bertrand Competition with Entry

This paper analyzes a simple, repeated game of simultaneous entry and pricing. We report a surprising property of the symmetric equilibrium solution: If the number of potential competitors is increased above two, the market breaks down with higher probability, and the competitive outcome becomes less likely. More potential competition lowers welfare--another Bertrand paradox. The model can also be applied to auctions to explore whether a revenue maximizing auctioneer should restrict the number of bidders if bidder participation is costly.

Start-up costs and pecuniary externalities as barriers to economic development

We use a dynamic monopolistic competition model to show that an economy that inherits a small range of specialized inputs can be trapped into a lower stage of development. The limited availability of specialized inputs forces the final goods producers to use a labor intensive technology, which in turn implies a small inducement to introduce new intermediate inputs. The start-up costs, which make the intermediate inputs producers subject to dynamic increasing returns, and pecuniary externalities that result from the factor substitution in the final goods sector, play essential roles in the model.

Strategies for Technological Innovation with Learning and Adaptation Costs

This paper attacks the problem of developing strategies for a firm to deal with technological change. We show that the product market strategies of the firm—including pricing, product positioning, and rent preemption strategies—can play a role in the efficient search for technology‐related information when information search is costly and there are adaptation costs due to the presence of agency. We utilize a dynamic model of spatial competition with uncertain technological innovations in which firms can learn from each other about technological developments. Private information and agency conflicts are shown to increase the effective information search costs of incumbents, who then use interfirm learning to their advantage in equilibrium. This viewpoint also allows us to see the role of mergers and acquisitions, subsidiary formation, and internal R&D labs in a new light. The more general point is that organizational structures and, in particular, the differential distribution of information within the organization impose constraints on the information‐search and adaptation strategies of the firm, and the formulation of product‐market and R&D strategies serves to relax these constraints.

Predicting Growth in Stands of Mixed Species from that in Individual Species

The growth of spring cabbage (Brassica oleracea var. capitata L.) and carrot (Daucus carota L.) in mixed species stands is compared with growth curves predicted by two forms of a dynamic competition model, which uses a conductance relationship (Aikman and Scaife, 1993) to allow for the constraints on growth from a set of environmental variables. While a plant is isolated, light interception is assumed to occur within a zone whose area is a function of plant weight. Lateral foliage expansion is constricted when the available space is filled. One form of the model assumes that all plants are of similar height (Aikman and Benjamin, 1994). The second form assumes the crown zones are in separate vertical layers, allowing greater lateral expansion in each layer but imposing shading on the underlayer.Parameter values of the model were estimated from the growth within even-aged monocrops. The first form of the model gave the best prediction of growth in the intercrops, often producing a close agreement between observed and predicted weights. Only at the highest density used, 0·05 m spacing, did the different height form of model give a better prediction of growth.Many mixed species stands may be approximated by one or other of the forms of the model, and the relevant form can easily be calibrated from the growth observed in monocrops. Hence, simple models may be sufficiently accurate to predict growth in mixed species systems such as intercrops, or crops and weeds.

Controllability Issues Concerning Particle Size in Emulsion Polymerization

The utility of the growth mechanism to influence polystyrene particle size distributions is investigated via a competitive growth framework. A dynamic competitive growth model, extrapolated from an experimentally validated unimodal model, is used to simulate the semi-batch growth of two monodisperse particle populations at 50°C. Results show that the greatest relative narrowing between the two populations occurs at the particle monomer concentration ([M]p) saturation limit and decreases as [M]p is decreased towards a limited reaction lower bound. Simulations run at these limits provide the reachable regions starting from several initial diameter population pairs. The areas of these regions are found to be dependent on the magnitude of the initial diameter ratio and the individual particle sizes.

Advertising Strategies in a Dynamic Oligopoly

The author uses a dynamic model of oligopolistic advertising competition, in which competitors are assumed to make a series of single-period advertising decisions with salvage values attached to achieved sales in each period, as the foundation for empirical analysis of the competitive situation involving the three largest ready-to-eat cereal manufacturers, Kellogg, General Mills, and the Post Division of Philip Morris’ General Foods. The primary insight of the author's empirical analysis is that General Mills places a higher future value on achieved sales than do the other competitors in the market.

Competition Among Franchises, Company-Owned Units and Independent Operators:

Population Ecology, as a dynamic model of competition, is applied to the study of franchise systems. The paper examines competition among populations of franchises, companyowned units, and independent operators, the relative responsiveness of each population to changes in its environment, and the impact of level of market demand and population density on each population. Census data from two sources, Franchising in the Economy and the Census of Retail Trade, are analyzed using Population Ecology methodologies. Directions for future research efforts are provided.

Industrial Blackmail: Dynamic Tax Competition and Public Investment

A dynamic model of intergovernmental competition for a large plant is presented, when local productivity is uncertain. One firm determines the location of its plant in each period by conducting an auction, soliciting bids from local governments. Equilibrium subsidies from the local governments are derived. The author also consider a two-stage game where local governments first choose a level of costly infrastructure then participate in the sequential auction. Even when costs are identical across locations, investing in different levels of infrastructure is a Nash equilibrium. Moreover, when infrastructure is endogenous in this manner, it is chosen efficiently.

A Model of the Evolution of Duopoly: Does the Asymmetry between Firms Tend to Increase or Decrease?

This paper is an attempt to identify some of the factors that affect the evolution of market structure in a model of dynamic competition between two firms. The stochastic evolution of the state of competition depends on the respective effort rates of the firms. The question is whether the current leader works harder than the laggard-does the 'gap' between firms tend to increase or decrease? We show that several effects are at work. The state tends to evolve in the direction where joint payoffs are greater. Since joint payoffs are related to joint product-market profits less joint effort costs, there are two classes of effect: the joint-profit effect and various joint-cost effects. The latter result in part from the pattern of profits, and in part from endpoint effects that give relief from efforts. Asymptotic expansions illuminate these influences. Moreover, we show by numerical simulation that there is another kind of joint-cost effect. The pattern of joint effort costs can influence the pattern of evolution of market structure, and the evolution of the pattern of market structure can influence the pattern of efforts, in a mutually self-reinforcing manner. In particular, there may be equilibria in which this last effect means that the laggard works harder than the leader even though all the other effects work in favour of the leader.

Volatility, information and noise trading

We construct a dynamic competitive model where price volatility comes from both information arrival and noise trading. We first show that in the absence of noise trading, there exists a fully revealing equilibrium, thus extending a well-known result to a multiperiod setting. Informational efficiency implies that price variations are serially uncorrelated and that volatility over time sums up to a constant. Thus a permanent increase in price volatility cannot be accounted for strictly in terms of an increase in information producing activities. In this context, information arrival at time 0 is welfare reducing (the Hirshleifer effect). We then study the effects of noise trading on the equilibrium prices. With noise trading, more information may mean less volatility as improved information places rational agents in a better position to counteract the actions of noise traders. We find that, in principle, significant episodes of noise trading can be identified as they translate into a negative correlation in price changes and that, under plausible hypotheses, more information is beneficiary in that it reduces the (net) welfare loss due to noise trading.

Competitive Profits in the Long Run

Profit rates differ across industries. Explanations have often relied on static models of imperfect competition. This paper develops a dynamic model of perfect competition to demon- strate that long-run average profit rates differ even across competitive industries when the effects of sunk costs on entry and exit are considered. The hypothesis that firms maximize their present expected values has few empirical implications for long-run average profit rates, but it does have implications for the behaviour of variables over time; for example, industries with high variability in the number of firms should exhibit low variability in firm values. Recent work in industrial organization theory has resulted in several useful dynamic competitive models of industry evolution. These models are of three types. The first, due to Jovanovic (1982), is a model of passive learning where producers, uncertain about their productivity, acquire noisy information about how efficient they are.6 The second, due to Ericson and Pakes (1989), is a model of active learning where producers invest to increase the probability that they will become more efficient. The third, exposited in Lambson (1991), differs from the learning models of industry evolution by assuming that producers know how productive they are and that they all have access to the same technologies, but that they are uncertain about future market conditions. (The description of a market condition includes all relevant exogenous factors; for example, a market condition may consist of a vector of input prices and an output demand curve.) These three approaches are not mutually exclusive; rather they attempt to capture different aspects of reality. This paper applies the third approach to the question of why profit rates differ across industries, even in the long run. In so doing, it explicitly takes into account the effects of sunk costs, entry, exit, and random market conditions on the determination of long-run average profit rates. The existence of sunk costs generates hysteresis, that is, effects

The Closed-Loop Motive for Voluntary Export Restraints

This paper examines the effects of voluntary export restraints in a dynamic game model of duopolistic competition. It is shown that the imposition of a voluntary export restraint at the free-trade level of imports increases the market price and the profits of all firms in the industry if free trade is identified as the closed-loop (subgame-perfect) Cournot equilibrium of the game. Hence, the authors conclude that the predictions of static Cournot competition do not carry over to the dynamic case.