Search results for "Bertrand competition"
showing 5 items of 5 documents
‘Tool port’ to ‘landlord port’: a game theory approach to analyse gains from governance model transformation
2018
This study investigates potential port users’ surplus and terminal operators’ profits due to transforming port governance from the ‘tool port’ model to the ‘landlord port’ model. Although the landl...
The Classical Notion of Competition Revisited
2013
This article seeks to fill a lacuna within classical economics concerning the process of market price determination in situations of market disequilibrium. To this aim, first we distinguish the classical notion of free competition from the Walrasian notion of perfect competition and we argue that the latter is beset with some theoretical difficulties alien to the former. Second, we reconstruct in some detail Smith’s and Marx’s views concerning market price determination and show that Marx’s extensive use of metaphors and numerical examples foreshadows the modern taxonomy of buyers’ market, sellers’ market, and mixed strategy equilibrium in the capacity space of a standard Bertrand duopoly m…
Inflation and optimal monetary policy in a model with firm heterogeneity and Bertrand competition
2018
Abstract We study the joint implications of heterogeneity of total factor productivity and strategic price interactions between firms on the dynamics of inflation and the design of optimal monetary policy. In this setting, more productive firms respond less to shocks affecting their marginal costs than less productive firms. As a consequence, economies with a larger proportion of highly productive firms face a flatter Phillips curve. Moreover, when these two features concur, the Ramsey problem gives rise to an optimal non-zero long run inflation that amplifies the differences in relative prices between more efficient and less efficient firms, thus increasing the market share of the former. …
Market Polarization and the Phillips Curve
2021
The Phillips curve has flattened out over the last decades. We develop a model that rationalizes this phenomenon as a result of the observed increase in polarization in many industries, a process along which a few top firms gain an increasing share of their industry market. In the model, firms compete a la Bertrand and there is exit and endogenous market entry, as well as optimal up and downgrading of technology. Firms with larger market shares find optimal to dampen the response of their price changes, thus cushioning the shocks to their marginal costs through endogenous countercyclical markups. Thus, regardless of its causes (technology, competition, barriers to entry, etc.), the recent i…
Paolo Sylos Labini Vindicated
2017
In the first part of our chapter we critically discuss i) Modigliani’s 1958 interpretation of Sylos Labini’s Oligopolio e Progresso Tecnico (1957), ii) the following debate concerning the Sylos Postulate −the assumption according to which “potential entrants behave as though they expected existing firms to adopt the policy most unfavourable to them, namely, the policy of maintaining output while reducing the price (or accepting reductions) to the extent required to enforce such an output policy” − and iii) the incumbent’s choice of productive capacity to install as strategic entry deterrence. In the second part of the chapter we develop a model in which, as in Dixit (1980), there are three …