Costly signal extraction and profit differentials in oligopolistic markets
نویسندگان
چکیده
Empirical evidence indicates that there can be persistent profit differentials between firms in an industry. We show that demand uncertainty and costly information acquisition by firms on market demand leads to significant profit differentials for intermediate levels of demand variability. 2000 Elsevier Science S.A. All rights reserved.
منابع مشابه
Supply Chain Network Design Under Profit Maximization and Oligopolistic Competition
In this paper, we model the supply chain network design problem with oligopolistic firms who are involved in the competitive production, storage, and distribution of a homogeneous product to multiple demand markets. The profit-maximizing firms select both the capacities associated with the various supply chain network activities as well as the product quantities. We formulate the governing Nash...
متن کاملCo-Evolving Better Strategies in Oligopolistic Price Wars
Using empirical market data from brand rivalry in a retail ground-coffee market, we model each idiosyncratic brand’s pricing behavior using the restriction that marketing strategies depend only on profit-relevant state variables, and use the genetic algorithm to search for coevolved equilibria, where each profit-maximizing brand manager is a stimulus-response automaton, responding to past price...
متن کاملCompetition yields efficiency in load balancing games
We study a nonatomic congestion game with N parallel links, with each link under the control of a profit maximizing provider. Within this ‘load balancing game’, each provider has the freedom to set a price, or toll, for access to the link and seeks to maximize its own profit. Given prices, a Wardrop equilibrium among users is assumed, under which users all choose paths ofminimal and identical e...
متن کاملPrivate benefits and market competition
This paper deals with corporate governance issues and competition policy. The impact of private benefits extraction on the values of oligopolistic firms is analyzed. Private benefits are assumed to generate costs which create price distortion on the product market. For a wide range of industry concentrations, we prove that this may affect the profit (i.e. the value) of the firms in a positive s...
متن کاملWage Differentials in Experimental Efficiency Wage Markets
In recent years, many econometric studies have confirmed the existence of inter-industry wage differentials. Even after controlling for a large number of joband worker related characteristics, and demographic variables, large and statistically significant industry wage differences remain. Moreover, these differences exist for union as well as for non-union workers and seem to be remarkably simi...
متن کامل