Higher-order optimization problems naturally appear when investigating the effects of a patent with finite length, as in the pioneering work of Futagami and Iwaisako (2007). In this paper, we establish the Euler equations and transversality conditions necessary for analyzing such higher-order...

This article models a North--South negotiation where the North provides a <italic>quid pro quo</italic> in exchange for the strengthening of the enforcement of intellectual property rights (IPR) protection in the South. We show that when Northern and Southern firms compete on quantity in the Southern market, the...

In this paper, we examine higher order difference problems. Using the "squeezing" argument, we derive both Euler's condition and the transversality condition. In order to derive the two conditions, two needed assumptions are identified. A counterexample, in which the transversality condition is...

In this paper we consider emergency government bailouts. We show that it is welfare‐enhancing to bail out failing firms that are facing a sudden negative demand shock and would otherwise go bankrupt, when there are sufficiently large fixed production costs and knock‐on effects (the negative...

We model a two-country bargaining process over the coordination of a horizontally differentiated product standard. We show that the necessary conditions for bargaining to take place are (i) firm heterogeneity and (ii) sufficiently high complying costs. When firms compete à la Cournot in the...