In this paper, an infinitely-repeated Bertrand game is considered. The model has a two-tier relationship; two firms make a self-enforced collusive agreement and each firm writes a law-enforced contract to its privately-informed agent. The main finding is that in optimal collusion, interaction...

For an N players coordination games, Tanaka (2000) proved that the notion of N/2 stability defined by Schaffer (1988) is a necessary and sufficient condition for long run equilibrium in an evolutionary process with mutations (in the sense of Kandori, et. al. (1993)). We argue that the critical...

The paper studies equilibrium selection in supermodular games based on a class of perfect foresight dynamics, introduced by Matsui and Matsuyama (JET 1995) and further developed by Hofbauer and Sorger (JET 1999, IGTR 2002) and Oyama (JET 2002). A normal form game is played repeatedly in a large...

It is well known that in a two stage duopoly model of product choice with quadratic transportation cost, the firms locate at the extreme endpoints of the market. This paper examines this model in an infinite horizon setting where in the initial period the firms choose locations and in subsequent...

Specialist merchants and traders---agents who mediate the transfer of goods and services between producers and consumers---are central to the economic process, but there are few theoretical models in which the institution of intermediation is an endogenous part of an equilibrium. This paper...

This paper analyzes bidding behavior in a multi period multiple unit auction. While bidders are ex ante symmetric, the first period outcome translates the second period game to a game between asymmetric bidders. The first period outcome determines who will be a strong or a weak bidder in the...

Can advertising lead to a sustainable competitive advantage? To answer this question, we propose a dynamic model of advertising competition where firms repeatedly advertise, compete in the product market, and make entry as well as exit decisions. Within this dynamic framework, we study two...

The paper analyzes tariff-settings by two large countries, in an alternating move, infinitely repeated game. We find that there always exists a ``non-cooperative'' Markov perfect equilibrium in which countries continue to select their individual Nash tariffs. If countries are patient, however,...

This paper analyzes a stochastic model of evolution in normal form games. The long-run behavior of individuals in this model is investigated in the limit where mutation rates tend to zero, while the expected number of mutations, and hence population sizes, tend to infinity. It is shown that...

When people share risk in financial markets, intermediaries provide costly enforcement for most trades and, hence, are an integral part of financial markets' organization. We assess the degree of risk sharing that can be achieved through financial markets when enforcement is based on the threat...