This paper develops the idea of forward induction in the context of increasing returns. The situation is modeled as a game of entry with a fixed cost and no marginal cost. The recursive equations that provide the solution of the infinitely repeated game are determined and solved for various cost...

This article takes the following question as a point of departure: if one firm is more efficient than a rival does it have cause to initiate a price war? In order to study the question, we rely on a simple duopoly model and try to make especially heavy use of the concept of barrier to mobility....

This paper provides a game theoritic rationale for the use of standards of behavior in hierarchies. lt proves that the common knowledge of such standards in a long term relationship generates tacit cooperation as long as the time horizon is far enough and that intermediary observations are...

This paper studies the optimal growth when research and development are explicitly distinguished. To this end, we perform the quantitative welfare analysis of an original model based on (i) a matching process between research and development and (ii) a competitive search process that determines...

We consider a Stackelberg like duopoly in which the strategy space of the firms are price-quantity pairs, meaning that, at this price, a firm is willing to sell at most the supplied quantity. It is shown that, at the equilibrium, the leader will quote a price lower than the price quoted by the...

It is generally expected that profit maximisation leads a firm to choose a more flexible plant the more uncertain its demand function is and/or the more variable is the sequence of quantities to produce. In this paper we make explicit the precise conditions under which this intuitive argument is...

We study the links between observation and flexible technological choices in a duopolistic industry. We show that, in large markets, the strategic value of flexibility is positive and the observation of technological choices promotes the adoption of more flexible technologies whereas in small...