Search results for "Free riding"
showing 8 items of 8 documents
Cumulative innovation, open source, and distance to frontier
2020
We develop a multistage game in which firms do cumulative research and development (R&D) to complete a lengthy process, and we study whether firms patent intermediate results or release them in Open Source. A patent holder obtains a larger reward in the market, but since in equilibrium it forecloses R&D, it remains alone to complete the process and so pays a larger cost than an Open Source firm. We have Open Source equilibria when R&D is highly complementary, R&D costs are large, and firms are sufficiently different and far from the frontier. We identify two market failures, in the forms of free riding and coordination failure, and we discuss public intervention.
Trade Associations: Why Not Cartels?
2021
First published: 30 September 2020 The relevance of special interests lobbying in modern democracies can hardly be questioned. But if large trade associations can overcome the free riding problem and form effective lobbies, why do they not also threaten market competition by forming equally effective cartels? We argue that the key to understanding the difference lies in supply elasticity. The group discipline which works in the case of lobbying can be effective in sustaining a cartel only if increasing output is sufficiently costly ‐ otherwise the incentive to deviate is too great. The theory helps organizing a number of stylized facts within a common framework. This article has been accept…
Generic Advertising, Brand Advertising and Price Competition: An Analysis of Free-Riding Effects and Coordination Mechanisms
2010
The main purpose of generic advertising is to enlarge the total market demand rather than capturing further slices from competitors. Several studies point out emergence of free-riding behavior under independent contribution and suggest use of coordination mechanism. However, existing literature does not shed light on the conditions under which generic advertising can be detrimental (beneficial) to stronger firms weakening (strengthening) their competitive advantage. Also, under a setting including both price and brand advertising competition, coordination in generic advertising has not been unraveled. In order to deal with such issues, we consider a one-stage duopoly game in which two firms…
Multistage Dynamics of International Environmental Agreements: Free-riding from Membership and Compliance*
2009
Abstract In dealing with the multistage dynamics of international environmental agreements (IEAs), it is necessary to analyze the dynamics of global emission level associated with the corresponding abatement process. We model multilateral collaboration among countries as a two-level coalitional game of heterogeneous players with a stepwise emission reduction over a finite and discretized period of time. The formed coalition is assumed to hold a leader's position in the game, and the players that did not join the agreement (free-riders) are assumed to accept a position of the followers. To analyze fulfillment of the emission reduction targets, we construct a time-consistent abatement scheme,…
Open Source without Free-Riding
2012
Considerable investments in Open Source software projects have been made in the last years by competing firms who could have free-ridden on the others' efforts. We identify two properties, one of decreasing returns to knowledge production and the other of preference for differentiated products in a monopolistically competitive market, which explain the phenomenon.
Reputation management in distributed systems
2008
Several distributed applications, implemented over today’s Internet, are based on the assumption that participating agents collaborate in order to achieve their own goal. However, when these applications are modelled as unstructured distributed systems, the greater autonomy and decentralization encourage antisocial behaviours, which are likely to cause performance degradation for the whole system. This paper presents a fully distributed reputation management system that allows the evaluation of agent reputation in unstructured environments without any centralized coordination. The proposed approach is based on game theory and is capable of capturing the highly dynamic nature of the involved…
Basic structure and tax havens
2012
In this paper I argue that Rawlsian Law of People (LP) is much more useful to the debate on international distributive justice than it is commonly assumed by many leading political philosophers (Pogge, Nussbaum, Sen, Beitz, Singer). I will show: 1) that these criticisms are misleading, insofar as they do not take the concept of basic structure seriously, and they reduce LP to an instance of ethical statism or of acritical acceptance of cultural pluralism; 2) that the basic domestic structures, and the principles that govern them, depend on the law of peoples and its principles as well. Therefore it is not true that each basic structure is independent of what occurs in the international fiel…
ASSET MARKETS AND EQUILIBRIUM SELECTION IN PUBLIC GOODS GAMES WITH PROVISION POINTS: AN EXPERIMENTAL STUDY
2001
We report experimental results on the effects that auctioning the right to play a public goods game with a provision point may have on equilibrium selection and individual behavior. Auctioning off such a right among a larger population of players strikingly enhances public good provision. Once public good provision is obtained, the auction price at the preliminary stage increases to its upper limit, dissipating all players’ gains associated with the provision of the public good. Individual deviations from the equilibrium strategy are neither able to force lower market prices nor to affect provision of the public good in subsequent periods. (JEL C72, C92, H41) I. INTRODUCTION Public good pro…