Capacity Accumulation Games with Technology Constraints
Jacek Krawczyk () and
Vladimir P. Petkov ()
Additional contact information
Vladimir P. Petkov: Victoria University of Wellington
A chapter in Dynamic Games in Economics, 2014, pp 161-185 from Springer
Abstract:
Abstract This chapter examines the conduct and performance of large mutually dependent firms. Its objective is to study contractual relationships in a dynamic bilateral monopoly, where producers’ investment choices must obey a technology constraint. This is in contrast to previous studies of accumulation games, in which technological interdependence was not explicitly allowed for. The analysis focuses on investment incentives and payoff allocation under two regimes: (1) contracting based on input quantities, and (2) contracting based on final revenues. The technologically feasible equilibrium strategies and the terms of trade that support them are characterized with intuitive necessary conditions which reflect the players’ intertemporal trade-offs. To assess the factors that influence efficiency and market power, the chapter presents a linear-quadratic example. Our simulations indicate that contracts based on input quantities generate higher joint payoffs and tend to benefit the input producer.
Keywords: Equilibrium Strategy; Input Quantity; Revenue Share; Contractual Arrangement; Allocation Function (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:spr:dymchp:978-3-642-54248-0_8
Ordering information: This item can be ordered from
http://www.springer.com/9783642542480
DOI: 10.1007/978-3-642-54248-0_8
Access Statistics for this chapter
More chapters in Dynamic Modeling and Econometrics in Economics and Finance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().