Price-setting and quantity-setting oligopoly games lead to extremely different outcomes in the market. One natural way to address this problem is to formulate a model in which some firms use price while the remaining firms use quantity as their decision variable. We introduce a mixed oligopoly game of this type and determine its equilibria. In addition, we consider an extension of this mixed oligopoly game through which the choice of the decision variables can be endogenized. We prove the emergence of the Cournot game.JEL Classification Number: D43; L13.
Economic theories of rational addiction aim to describe consumer behavior in the presence of habit-forming goods. We provide a biological foundation for this body of work by formally specifying conditions under which it is optimal to form a habit. We demonstrate the empirical validity of our thesis with an in-depth review and synthesis of the biomedical literature concerning the action of opiates in the mammalian brain and their effects on behavior. Our results lend credence to many of the unconventional behavioral assumptions employed by theories of rational addiction, including adjacent complementarity and the importance of cues, attention, and self-control in determining the behavior of addicts. Our approach suggests, however, that addiction is "harmful" only when the addict fails to implement the optimal solution. We offer evidence for the special case of the opiates that harmful addiction is the manifestation of a mismatch between behavioral algorithms encoded in the human genome and the expanded menu of choices-generated for example, by advances in drug delivery technology-faced by consumers in the modern world.
We characterize the preference domains on which the Borda count satisfies Arrow's "independence of irrelevant alternatives" condition. Under a weak richness condition, these domains are obtained by fixing one preference ordering and including all its cyclic permutations ("Condorcet cycles"). We then ask on which domains the Borda count is non-manipulable. It turns out that it is non-manipulable on a broader class of domains when combined with appropriately chosen tie-breaking rules. On the other hand, we also prove that the rich domains on which the Borda count is non-manipulable for all possible tie-breaking rules are again the cyclic permutation domains.
This article is searching for necessary and sufficient conditions which are to be imposed on the demand curve to guarantee the existence of pure strategy Nash equilibrium in a Bertrand-Edgeworth game with capacity constraints.
* We are very grateful to three anonymous referees for their helpful comments and suggestions. The second author gratefully acknowledges financial support from the Hungarian Academy of Sciences (MTA) through the Bolyai János research fellowship.
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