Competitive Equilibrium Research Articles

Weather influences survival probability in two coexisting mammals directly and indirectly via competitive asymmetry.

Ecologists have studied the role of interspecific competition in structuring ecological communities for decades. Differential weather effects on animal competitors may be a particularly important factor contributing to the outcome of competitive interactions, though few studies have tested this hypothesis in free-ranging animals. Specifically, weather might influence competitive dynamics by altering competitor densities and/or per-capita competitive effects on demographic vital rates. We used a 9-year data set of marked individuals to test for direct and interactive effects of weather and competitor density on survival probability in two coexisting mammalian congeners: Columbian ground squirrels (Urocitellus columbianus) and northern Idaho ground squirrels (Urocitellus brunneus). Ambient temperature and precipitation influenced survival probability in both species, but the effects of weather differed between the two species. Moreover, density of the larger Columbian ground squirrel negatively impacted survival probability in the smaller northern Idaho ground squirrel (but not vice versa), and the strength of the negative effect was exacerbated by precipitation. That is, cooler, wetter conditions benefited the larger competitor to the detriment of the smaller species. Our results suggest weather-driven environmental variation influences the competitive equilibrium between ecologically similar mammals of differential body size. Whether future climate change leads to the competitive exclusion of either species will likely depend on the mechanism(s) explaining the coexistence of these competing species. Divergent body size and, hence, differences in thermal tolerance and giving up densities offer potential explanations for the weather-dependent competitive asymmetry we documented, especially if the larger species competitively excludes the smaller species from habitat patches of shared preference via interference.

Competitive multi-component bio-syngas separation for hydrogen production: breakthrough dynamics, thermal effects, and adsorbent stability analysis under practical operating conditions

The present work experimentally investigates the ability of zeolite 13X to purify H2 from a multi-component bio-syngas feed [composition (mol%): H2/CH4/CO/CO2 – 51.7/3.4/13.2/31.7] in a bench scale, glass wool insulated column simulating a near-industrial adiabatic environment. The column breakthrough dynamics and thermodynamic interactions are studied as a function of total pressure and feed flow rate. The adsorbent showed excellent separation characteristics with the highest affinity for CO2 followed by CO and CH4, and completely restricts their propagation for pure H2 production. The non-isothermal operation results in forming two distinct temperature fronts and manifests itself by broadening the mass transfer zone, decreasing loadings, and causing an early breakthrough of various adsorbates. The competitive adsorption is confirmed through the presence of roll-ups with a slowly moving CO2 concentration front displacing pre-adsorbed CH4 and CO over the duration of the experiment. Further, dynamic adsorption and desorption (sweep gas: He and CO2) experiments are respectively employed to measure competitive equilibrium loadings of heavy (CO2) and light components (CH4, CO). Additionally, the variation in breakthrough time, adsorbate propagation rate, column peak temperature, breakthrough and effective loading, and competitive selectivities are analyzed and discussed. Finally, a novel methodology to design H2 purification systems is proposed and put to practical use by developing and long duration (∼1500 cycles) testing a pilot scale (feed flow rate: 100 Nm3/h) vacuum pressure swing adsorption system. The cyclic separation unit while generating fuel-cell grade H2, displayed complete operational repeatability, with minimal deviation (<6 %) in adsorbent textural properties and crystalline structure.

A Theoretical Analysis of Collusion Involving Technology Licensing Under Diseconomies of Scale

Abstract This study focuses on firms with cost-efficient technology that use licensing to influence product market behaviour, market prices and outputs and the resulting welfare effects. We show how licensing fees can be constructed that lead to identical collective industry outputs as under collusion while industry output is equal to or higher than that achieved under competition and sustained in equilibrium. Hence, consumers are either indifferent to firms’ collusion or better off when they do collude, whereas firms (producers) are always better off due to the improved cost efficiency of integrating the new production technology. This provides a theoretical foundation that explains why technology licensing is observed in highly concentrated industries characterised by significant diseconomies of scale relative to demand. We contribute to the literature by demonstrating how technology licensing involving collusion can reduce the dissipation effect and improve social welfare in oligopolistic industries. An important policy implication is that collusion involving technology licensing should not always be challenged by antitrust authorities, particularly when it does not transfer welfare from consumers to producers.

Influence of carbon emission reduction of enterprises on economic growth under climate warming

Global warming, as the main feature of the climate problem, is gradually coming into our field of vision. Under this background, Poisson jump is applied to describe the arrival of natural disasters caused by global warming. Households and firms can dynamically update their beliefs about the arrival rate of disasters. In order to mitigate global warming, firms pay a share of the cost to reduce the carbon emissions in the process of production. In this paper, we discuss the social planner equilibrium and the competitive equilibrium, respectively, and obtain the Hamilton-Jacobi-Bellman (HJB) equations of value function in both contexts. Then, the equations are numerically simulated, leading to the following conclusions: under the same level of pessimism, investments and values of firms, as well as household consumption, all decrease as the emission abatement rate increases, and the social welfare is almost unchanged compared to the situation without the cost of emission reduction. Furthermore, in order to deal with the short-term adverse effects on the economy caused by emission reductions, the government subsidy is introduced into the model. The results show that, under the same level of pessimism, the government subsidy drives the growth of investment and consumption. The value of the firms that pay the emission abatement has been boosted, and economic growth rate has risen to a certain degree, while social welfare remains almost the same.

Policy polarization, primaries, and strategic voters

We consider two-stage electoral competitions with strategic voters, investigating the effects of valence (i.e., a candidate’s personal quality) on policy polarization. In our model, two parties compete in a general election, and each party has two office-seeking candidates. Parties first hold a primary election to decide their representative, and then put forward their winning candidate to compete in the general election. Candidates are thus characterized by their promised policy and their valence. Although voters value policies differently, they value valence uniformly. We focus on a competitive regime pure strategy Nash equilibrium where the candidate with the highest valence does not necessarily win the general election. We provide the sufficient conditions under which such an equilibrium exists, as well as a novel comparative static analysis of the valence differences between candidates (or the valence advantage). Our findings demonstrate that changing the valence advantage in general and primary elections can pose differing implications for policy outcomes and policy polarization.

Container shipping: A market equilibrium perspective on freight rates formation post-Covid-19

The unprecedented container shipping freight rate levels post-Covid-19 are studied in a stochastic dynamic partial equilibrium framework. The proposed container marked model is calibrated on annual aggregate data from the two recent decades. The observed freight rate levels in 2021 and 2022 match a switch of competitive equilibria from Bertrand to Cournot competition. Whereas increased costs and reduced productivity play a role in explaining freight rates, these factors alone appear not to be able to justify the high post-Covid-19 freight rate levels.

Phase diagram-guided composition design and property investigation of Ni-based filler metals

The fundamental mechanism underlying the formation of brazed joints involves the diffusion of elements between the base metal (BM) and the brazing filler metal (FM). The formation of brittle compounds in FM during the brazing process frequently results in a significant deterioration of the mechanical properties of the brazed joints. Ni and Cu elements exhibit infinite solubility, and the incorporation of Cu element results in a decrease in the liquidus temperature of FM, thereby enhancing its surface wettability on the BM. The present investigation involves the preparation of as-cast and amorphous FMs with varying Cu element concentrations to examine their material properties, such as weldability, wettability, thermophysical behavior, and creep resistance. The thermophysical and mechanical properties of the nickel-based filler metal BNi-2 were evaluated using the JMatPro software for material thermodynamic simulation and compared with data obtained from existing literatures. An analysis is conducted on the creep properties of a novel FM comprising of Ni, Cr, Fe, Si, B, and Cu. The results suggest that the thermophysical properties of BNi-2 filler are minimally impacted by the presence of Cr (6–8 wt%), Fe (2.5–3.5 wt%), Si (4–5 wt%), and B (2.75–3.5 wt%). Furthermore, alterations in the composition of Si and B elements have a significant impact on the distribution of γ and γ′ phases, consequently influencing the creep properties of the material. At 25 °C, the equilibrium phase of BNi-2 with different Cu contents indicates a gradual decrease in the content of γ phase, while the content of γ′ and Cu–Ni phases increases with an increase in Cu content. The BNi-2 filler with 3 % Cu exhibits the most favorable properties in terms of steady creep rate and fracture life compared to other fillers. This is attributed to the competitive equilibrium between the γ phase and Cu–Ni phase. The addition of 6 % Cu element results in the optimal wettability of the filler metal and creep resistance of the brazed joints. It is also observed that as the concentration of Cu reaches 9 %, there is a gradual increase in the FeB phase, a rise in the proportion of brittle compounds, and a decline in the amorphous forming ability.

Efficient Hole Transfer from CdSe Quantum Dots Enabled by Oxygen-Deficient Polyoxovanadate-Alkoxide Clusters.

A limitation of the implementation of cadmium chalcogenide quantum dots (QDs) in charge transfer systems is the efficient removal of photogenerated holes. Rapid hole transfer has typically required the ex situ functionalization of hole acceptors with groups that can coordinate to the surface of the QD. In addition to being synthetically limiting, this strategy also necessitates a competitive binding equilibrium between the hole acceptor and native, solubilizing ligands on the nanocrystal. Here we show that the incorporation of oxygen vacancies into polyoxovanadate-alkoxide clusters improves hole transfer kinetics by promoting surface interactions between the metal oxide assembly and the QD. Investigating the reactivity of oxygen-deficient clusters with phosphonate-capped QDs reveals reversible complexation of the POV-alkoxide with a phosphonate ligand at the nanocrystal surface. These findings reveal a new method of facilitating QD-hole acceptor association that bypasses the restrictions of exchange interactions.

Optimal allocations in growth models with private information

This paper considers a class of growth models with idiosyncratic human capital risk and private information about individual effort choices (moral hazard). Households are infinitely-lived and have preferences that allow for a time-additive expected utility representation with a one-period utility function that is additive over consumption and effort as well as logarithmic over consumption. Human capital investment is risky due to idiosyncratic shocks that follow a Markov process with transition probabilities that depend on effort choices. The production process is represented by an aggregate production function that uses physical capital and human capital as input factors. We show that constrained optimal allocations are simple in the sense that individual effort levels and individual consumption growth rates are history-independent. Further, constrained optimal allocations are the solutions to a recursive social planner problem that is simple in the sense that exogenous shocks are the only state variables. We also show that constrained optimal allocations can be decentralized as competitive equilibrium allocations of a market economy with a simple tax- and transfer scheme. Finally, it is always optimal to subsidize human capital investment in the market economy.

Corporate income taxation and multinational production

AbstractThrough the lens of a quantitative general equilibrium model of international trade and multinational production, this paper studies corporate tax competition and cooperation among asymmetric countries. The model theoretically supports the empirical regularities that corporate income taxation influences multinational firms' location and production decisions. Calibrating the model to three asymmetric countries for a hypothetical tax competition, I find that race to the bottom occurs in the Nash equilibrium. Furthermore, counterfactual analysis of the global minimum corporate tax shows welfare reduction compared to the equilibrium of tax competition but welfare improvement compared to the current tax regime.

Exchange of indivisible goods under matroid constraints

We study the problem of reallocating indivisible goods among a set of strategic agents by generalizing the original Sharpley-Scarf market to the setting where an object can be allocated to multiple agents but subject to an associated matroid constraint. We refer to this modified market as the matroid Sharpley-Scarf market. For this general market, we present a Pareto-optimal, individually rational and group strategy-proof mechanism. Our mechanism is simple and natural generalization of the Top Trading Cycle mechanism and the Serial Dictator mechanism. In our analysis, we demonstrate that the weak core may be absent in the matroid Sharpley-Scarf market, while a relaxed version called the constrained core does exist. Furthermore, we extend the concept called competitive equilibrium to the matroid Sharpley-Scarf market and show that an allocation is a competitive equilibrium if and only if it can be produced by our mechanism.

Perfect Competition and Fixed Costs: The Role of the Ownership Structure

Abstract It is widely considered that a (perfectly) competitive equilibrium cannot survive to the existence of fixed costs because firms generate losses in equilibrium. In this theoretical and methodological article, I demonstrate that this statement is not valid by developing some counter-examples. In particular, I clearly show that a competitive equilibrium and fixed costs are tenable, depending on the ownership structure of models. I then delimit the role of fixed costs in macroeconomic models. Notably, I find that fixed costs can improve the level of aggregate output in the long run.

Optimal taxation of multinational enterprises: A Ramsey approach

What is the optimal design of the international corporate tax system? We revisit this classic question in a multi-country general equilibrium model that incorporates three key features of the modern globalized economy: multinational production; intangible capital; and international profit shifting. Our model’s competitive equilibrium is inefficient due to an externality that arises from international spillovers in intangible investment. In the absence of profit shifting, there is little, if anything, a Ramsey planner can do with corporate income taxes to improve the allocation of intangible investment across countries. However, profit shifting allows the planner to use corporate income taxes to internalize the externality and achieve an efficient allocation of intangible investment. To quantitatively investigate the properties of the Ramsey planner’s optimal policy in a more realistic setting, we extend our model to an environment with firm heterogeneity and selection into multinational production. Without spillovers, it would be optimal to shut down profit shifting as much as possible. With spillovers, it would be optimal to allow MNEs to continue to shift profits, and if the planner is restricted to Pareto-improving policies, it would be optimal to allow even more profit shifting than under the status quo.

Platforms Competition: An Ecosystem-View Analysis Based on Evolutionary Game Theory

The competition between platforms supported by digital technology, to a great extent, affects the structure of the whole industry and the fate of individual enterprises in the industry. For related enterprises, it is very important to clarify the influencing factors of platform competition equilibrium. This paper constructs a game model that includes platforms, suppliers, and the final consumers. We analyze the condition and stability of each equilibrium and the impacts of the characteristics of the core and complementary products on the equilibrium by using the method of evolutionary game. Our results show the following: (1) If the two platforms initially have separate advantages in terms of the number of suppliers or consumers, there will be an equilibrium of the coexistence of the two platforms; otherwise, there will be an equilibrium of single platform dominating. (2) The equilibrium of a single platform dominating is more stable than that of the coexistence of multiple platforms. (3) The equilibrium of coexistence is more easily broken by the occasional shock of increasing or decreasing the number of suppliers than by consumers. (4) Platforms with poor core product quality and a high price for core and complementary products can coexist with other superior platforms only if the former has more consumers and suppliers at the beginning of the competition. This paper not only enriches the research content in the field of platform competition, but also provides new ideas for them to develop appropriate competition strategies in combination with their own conditions.

Flexible time horizon planning, learning and aggregate fluctuations

A dynamic general equilibrium model is constructed and analyzed under the assumptions that the representative decision maker is endowed with incomplete knowledge about his environment of interest along with limited cognitive skills. Under various beliefs about the long-run growth prospects consistent with Kaldor's, 1961 stylized facts, the benchmark infinite-dimensional decentralized planning problem collapses into infinite sequences of T>1 dimensional sub-problems which are each within the decision maker's limited computing range. Based on the time length of the planning horizon and the nature of expectations, the resulting framework in which both forecasts and plans may get revised in the light of new information encompasses at the limits the benchmark infinite horizon case with perfect foresight, a rolling infinite horizon case, a self-fulfilling static planning case and Day's, 1969 two-period heuristic case. Under exogenous price and quantity growth forecasts consistent with the perfect foresight steady-state balanced growth path, the time length of the planning horizon may have no effect on the resulting competitive equilibrium which may deviate dramatically from the optimal solution. When these growth forecasts are endogenous, the competitive equilibrium effects of the planning horizon time length depend on the characteristics of the information sets. The resulting model may help us to better understand how economies respond to shocks by unraveling new propagation mechanisms related to changes in optimism or pessimism about short-run and/or long-run growth prospects.

An optimization-based partial marginal pricing method to reduce excessive consumer payment in electricity markets

Among the pricing schemes, locational marginal pricing is the most widely adopted scheme in current electricity markets. Despite the nice properties, theoretical study and practical experience have shown that considering the strategic bidding behaviors of market participants, locational marginal pricing may result in excessive consumer payment and prejudices market efficiency. In this paper, we propose an optimization-based partial marginal pricing method to reduce consumer payment under strategic bidding. The advantages of the locational marginal pricing method are reserved to the best extent while the remaining problems are delicately handled. To achieve this, we first analyze the characteristics and problems of the locational marginal pricing scheme and present a partial marginal pricing structure. Second, we establish an optimization-based partial marginal pricing model, in which discriminatory price components are introduced in price formulation and the pricing properties including competitive equilibrium and revenue adequacy are formulated as constraints. Third, to verify the performance of the proposed pricing scheme considering the strategic bidding, a bi-level strategic bidding problem of the generator under the proposed pricing method is established and transformed into a mixed integer linear programming problem. The numerical results indicate that under the conventional pricing methods, the consumer payments under strategic bidding can be up to 16.67 times higher than those under truthful bidding, while the proposed method can effectively reduce excessive consumer payments by 92.1% while maintaining the desired pricing properties.

FINANCIAL FAIR PLAY IN EUROPEAN FOOTBALL CLUBS

This research conducts an in-depth analysis of the Fair Play Law as it applies to European Clubs, tracing its origins to its proposal in 2007 and subsequent enactment in 2010. The overarching objective of this legislation is to establish a level and equitable playing field, ensuring that all participating clubs have equal opportunities while concurrently preserving the overall competency and integrity of the sport within the European context. The paper embarks on a comprehensive exploration of the multifaceted concept of fair play within the European football landscape. It seeks to provide a clear and nuanced definition of fair play and to illuminate the intricate web of challenges associated with this concept, with a particular focus on the complexities surrounding club investments and the financial constraints they encounter. Furthermore, the study ventures into the domain of financial and economic dynamics, undertaking a meticulous analysis of the significant challenges precipitated by the Fair Play Law's imposition and subsequent implementation. In doing so, it offers invaluable insights into the profound impact of these regulations on the financial models, budgets, and competitive equilibrium of European football clubs. In essence, this research elucidates the intricate interplay between regulatory measures and the complex economic facets of European club football, underscoring the pursuit of fairness and its profound ramifications on the broader footballing landscape.

Solving Strong-Substitutes Product-Mix Auctions

This paper develops algorithms to solve strong-substitutes product-mix auctions: it finds competitive equilibrium prices and quantities for agents who use this auction’s bidding language to truthfully express their strong-substitutes preferences over an arbitrary number of goods, each of which is available in multiple discrete units. Our use of the bidding language and the information it provides contrasts with existing algorithms that rely on access to a valuation or demand oracle. We compute market-clearing prices using algorithms that apply existing submodular minimization methods. Allocating the supply among the bidders at these prices then requires solving a novel constrained matching problem. Our algorithm iteratively simplifies the allocation problem, perturbing bids and prices in a way that resolves tie-breaking choices created by bids that can be accepted on more than one good. We provide practical running time bounds on both price finding and allocation and illustrate experimentally that our allocation mechanism is practical. Funding: E. Baldwin and P. Klemperer were supported by the Economic and Social Research Council [Grant ES/L003058/1]. P. W. Goldberg and E. Lock were supported by a JP Morgan faculty fellowship during the work on the final version of the paper. Supplemental Material: The online companion is available at https://doi.org/10.1287/moor.2019.0248 .

A Survey on Fair Allocation of Chores

Wherever there is group life, there has been a social division of labor and resource allocation, since ancient times. Examples include ant colonies, bee colonies, and wolf colonies. Different roles are responsible for different tasks. The same is true of human beings. Human beings are the largest social group in nature, among whom there are intricate social networks and interest networks between individuals. In such a complex relationship, how do decision makers allocate resources or tasks to individuals in a fair way? This is a topic worthy of further study. In recent decades, fair allocation has been at the core of research in economics, mathematics and other fields. The fair allocation problem is to assign a set of items to a set of agents so that each agent’s allocation is as fair as possible to satisfy each agent. The fairness measurements followed in current research include envy-freeness, proportionality, equitability, maximin share fairness, competitive equilibrium, maximum Nash social diswelfare, and so on. In this paper, the main concern is the allocation of chores. We discuss this problem in two parts: divisible and indivisible. We comprehensively review the existing results, algorithms, and approximations that meet various fairness criteria in chronological order. The relevant results of achieving fairness and efficiency are also discussed. In addition, we propose some open questions and future research directions for this problem based on existing research.

Local Energy Markets*

In current power markets, the bulk of electricity is sold wholesale and transported to consumers via long‐distance transmission lines. Recently, decentralized local energy markets have evolved, often as isolated networks based on solar generation. We analyze strategic pricing, investment, and welfare in local energy markets. We show that local energy markets yield competitive equilibrium prices and provide efficient investment incentives. Yet, we find that strategic behavior leads to allocative inefficiency. We propose a clearing mechanism that induces truth‐telling behavior and restores first‐best welfare.