Payoff-Improving Competition: Games with Negative Externalities

Petros Sekeris and Kevin Siqueira ()
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Kevin Siqueira: University of Texas at Dallas

Review of Industrial Organization, 2021, vol. 58, issue 3, No 5, 455-474

Abstract: Abstract We demonstrate that more intense competition in games with production and negative externalities may be payoff-improving, and therefore welcomed by incumbents. In games that feature equilibria with strategic complements, increased competition may give rise to a new equilibrium where aggregate effort is lower, and the resulting reduced levels of externalities ultimately leaves all players better off. This setting applies to models of Cournot oligopoly, of common pool resources, and contests with endogenous prizes.

Keywords: Negative externalities; Efficiency; Competition; Commons; Contests (search for similar items in EconPapers)
JEL-codes: C72 D43 D62 Q30 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11151-020-09757-z

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