Strategic Trade Policy and the Home Bias in Firm Ownership Structure

In this note we consider the preferences of a profit maximizing firm for international ownership in a world in which firms compete in an international Cournot oligopoly, and in which countries use strategic trade policy. We find that firms prefer national ownership and show that full indigenisation occurs in the equilibrium.strategic trade, international ownership, Cournot oligopoly, home bias

Merger and collusion in contests

Competition in some product markets takes the form of a contest. If some firms cooperate in such markets, they must decide how to allocate effort on each of their products and whether to reduce the number of their products in the competition. We show how this decision depends on the convexity properties of the contest success function, and we characterize conditions under which cooperation is profitable. -- In vielen Gütermärkten erfolgt der Wettbewerb zwischen Unternehmen nicht primär über Preise und Mengen, sondern über Verkaufsanstrengungen. Ein Beispiel hierfür ist der Kampf um Marktanteile und Kunden in Märkten mit hohen Werbeaufwendungen. Wenn Unternehmen in solchen Märkten kooperieren, müssen sie entscheiden, ob sie ihre gesamte Produktpalette beibehalten und ihre Verkaufsanstrengungen auf alle Produkte verteilen („Kollusion“) oder ob sie die Anzahl ihrer Produkte reduzieren („Fusion“). Wir zeigen, daß diese Entscheidung von den Konvexitätseigenschaften der Funktion abhängt, die den Markterfolg eines Produkts in Abhängigkeit von den Verkaufsanstrengungen für dieses Produkt bzw. für die Konkurrenzprodukte bestimmt, und untersuchen die Bedingungen, in denen Kooperation in Form von „Kollusion“ oder „Fusion“ für die kooperierenden Unternehmen profitabel ist.Contests,merger,collusion,promotional competition,Kampf um Marktanteile,Kollusion,Fusion

Merger in Contests

Competition in some markets is a contest. This paper studies the merger incentives in such markets. Merger can be profitable. The profitability depends on the post-merger contest st ructure, the discriminatory power of the contest and on the number of contestantsContests, merger

Forbidden subgraphs that imply Hamiltonian-connectedness

It is proven that if $G$ is a $3$-connected claw-free graph which is also $Z_3$-free (where $Z_3$ is a triangle with a path of length $3$ attached), $P_6$-free (where $P_6$ is a path with $6$ vertices) or $H_1$-free (where $H_1$ consists of two disjoint triangles connected by an edge), then $G$ is Hamiltonian-connected. Also, examples will be described that determine a finite family of graphs $\cal{L}$ such that if a 3-connected graph being claw-free and $L$-free implies $G$ is Hamiltonian-connected, then $L\in\cal{L}$. \u

Averting economic collapse and the solipsism bias

We study the behavior of experimental subjects who have to make a sequence of risky investment decisions in the presence of network externalities. Subjects follow a simple heuristic-investing after positive experiences and reducing their propensity to invest after a failure. This result contrasts with the theoretical findings of Jeitschko and Taylor [Jeitschko, T.D., Taylor, C., 2001. Local discouragement and global collapse: A theory of coordination avalanches. Amer. Econ. Rev. 91 (1), 208-224] in which even agents who have only good experiences eventually stop investing because they account for the fact that others with worse experiences will quit. This can trigger sudden economic collapse-a coordination avalanche-even in the most efficient Bayesian equilibrium. In the experiment, subjects follow their own experiences and disregard the possible bad experiences of others-thus exhibiting behavior that we term "solipsism bias." Solipsism results in sustained investment activity and thus averts complete collapse. (c) 2005 Elsevier Inc. All rights reserved

Merger profitability and trade policy

We study the profitability and welfare effects of merger in a strategic trade policy environment. Merger changes the strategic trade policy equilibrium. We show that merger can be profitable and welfare enhancing here, even though it is not profitable in a laissez-faire economy. A key element is the change in the governments’ incentives to give subsidies to their local firms. We apply the results to the merger between Boeing and McDonnell-Douglas, where subsidies are a constant matter of debate. Our theory explains why the merger was profitable for Boeing and McDonnell-Douglas, why Airbus Industries opposed the merger, why the US authorities agreed to the merger, and why the EU competition authorities opposed it. -- Wir betrachten die Profitabilität und die Wohlfahrtseffekte von Unternehmensfusionen in einer internationalen Welt, in der Staaten das Instrument strategischer Außenhandelspolitik nutzen. Die Rückwirkungen der Fusionen auf die Wahl der strategischen Außenhandelspolitik machen Fusionen von Unternehmen des gleichen Landes profitabel, selbst wenn diese Fusionen in einer Welt ohne Außenhandelssubventionen nicht profitabel wären. Diese Resultate können erklären, weshalb die Fusion zwischen Boeing und McDonnell-Douglas profitabel war, weshalb Airbus unter der Fusion leidet und weshalb die US-Wettbewerbsbehörde der Fusion gegenüber positiver eingestellt war als die europäische Wettbewerbsbehörde.Merger,strategic trade policy

Strategic Trade Policy and Merger Profitability

We study the profitability incentives of merger and the endogenous industry structure in a strategic trade policy environment. Merger changes the strategic trade policy equlilibrium. We show that merger can be profitable and welfare enhancing here, even though it would not be profitable in a laissez-faire economy. A key element is the change in the governments. incentives to give subsidies to their local firms. National merger induces more strategic trade policy, whereas international merger does not

Image gathering and coding for digital restoration: Information efficiency and visual quality

Image gathering and coding are commonly treated as tasks separate from each other and from the digital processing used to restore and enhance the images. The goal is to develop a method that allows us to assess quantitatively the combined performance of image gathering and coding for the digital restoration of images with high visual quality. Digital restoration is often interactive because visual quality depends on perceptual rather than mathematical considerations, and these considerations vary with the target, the application, and the observer. The approach is based on the theoretical treatment of image gathering as a communication channel (J. Opt. Soc. Am. A2, 1644(1985);5,285(1988). Initial results suggest that the practical upper limit of the information contained in the acquired image data range typically from approximately 2 to 4 binary information units (bifs) per sample, depending on the design of the image-gathering system. The associated information efficiency of the transmitted data (i.e., the ratio of information over data) ranges typically from approximately 0.3 to 0.5 bif per bit without coding to approximately 0.5 to 0.9 bif per bit with lossless predictive compression and Huffman coding. The visual quality that can be attained with interactive image restoration improves perceptibly as the available information increases to approximately 3 bifs per sample. However, the perceptual improvements that can be attained with further increases in information are very subtle and depend on the target and the desired enhancement

Electronic noise-free measurements of squeezed light

We study the implementation of a correlation measurement technique for the characterization of squeezed light. We show that the sign of the covariance coefficient revealed from the time resolved correlation data allow us to distinguish between squeezed, coherent and thermal states. In contrast to the traditional method of characterizing squeezed light, involving measurement of the variation of the difference photocurrent, the correlation measurement method allows to eliminate the contribution of the electronic noise, which becomes a crucial issue in experiments with dim sources of squeezed light.Comment: submitted for publicatio