[PDF] Spatial Competition With Unrestricted Bargaining eBook
Spatial Competition With Unrestricted Bargaining Book in PDF, ePub and Kindle version is available to download in english. Read online anytime anywhere directly from your device. Click on the download button below to get a free pdf file of Spatial Competition With Unrestricted Bargaining book. This book definitely worth reading, it is an incredibly well-written.
Two-stage, non-cooperative models of spatial competition usually assume that firms have price-setting power in the second stage of the game. This paper relaxes the price-setting assumption and replaces it with unrestricted bargaining. With unrestricted bargaining, a firm cannot capture more than its location-based, cost advantage. Further, there always exists an equilibrium in which firms choose socially efficient locations. These results do not depend on either the number of firms, the locations of the buyers, or the shape of the transportation-cost function.
In the last twenty-five years, game theory has been applied to a growing number of practical problems: from antitrust analysis to monetary policy; from the design of auction institutions to the structuring of incentives within firms; from patent races to dispute resolution. The purpose of Game Theory and Business Applications is to expand these applications of game theory into a broad and meaningful view of the way business decisions can be modelled and analyzed. The chapter contents embrace a wide variety of business functions - from accounting to finance, to operations, to strategy, and to organizational design. In addition, specific application areas include numerous kinds of market competition, bargaining, auctions and competitive bidding. All of these applications involve competitive decision settings, specifically situations where a number of economic agents in pursuit of their respective self-interests take actions that together affect all of their fortunes. In the language of game theory, players take actions consistent with the given `rules of the game,' and these joint actions determine final outcomes and payoffs. As this volume demonstrates, game theory provides a compelling guide for business strategy. The first section of this volume discusses game-theoretic applications in four functional areas of business: finance, accounting, operations management and information systems, and organization design. The second section considers competitive strategies in `imperfect' markets. Using cooperative and non-cooperative game-theoretic approaches, these four chapters consider various topics: spatial competition, signaling of product quality, trust and cooperation in ongoing relationships, strategic behavior in bargaining, and the `balance of power' between the firm and its buyers and suppliers. The last section of the book deals in detail with auctions and competitive bidding institutions. The emphasis is on the contributions of game theory to both auction theory and practice. Topics considered include optimal auctions, bidder collusion, and the design of institutions for selling the radio spectrum and trading electrical power.
We generalize Hotelling's model of spatial competition with more than two firms in a two-dimensional space. Firms choose both price and location to maximize profits. The principle of minimum differentiation does not hold in general. Local duopolies emerge from the interaction between firms. Firms do not spread uniformly across the two-dimensional space, nor do they all charge the same price. Firms in more competitive locations charge lower prices. More product attributes produce more price competition.
We characterize mixed-strategy equilibria when capacity constrained suppliers can charge location-based prices to different customers. We establish an equilibrium with prices that weakly increase in the costs of supplying a customer. Despite prices above costs and excess capacities, each supplier exclusively serves its home market in equilibrium. Competition yields volatile market shares and an inefficient allocation of customers to firms. Even ex-post cross-supplies may restore efficiency only partly. We show that consumers may benefit from price discrimination whereas the the firms make the same profits as with uniform pricing. We use our findings to discuss recent competition policy cases and provide hints for a more refined coordinated-effects analysis.