Antoine Soubeyran

Cost heterogeneity, industry concentration and strategic trade policies

Abstract We show that if domestic firms do not have identical unit costs, then the interplay between the Herfindahl index of concentration and the elasticity of the slope of the demand curve is of major importance in the determination of optimal trade policies. In some cases, the direction of optimal policy is reversed.

Cost Manipulation Games in Oligopoly, with Costs of Manipulating

We analyze a class of two-stage games where rival firms incur real resource costs in manipulating their marginal costs, so as to influence the outcome of the game they want to play in stage two. Marginal costs may be manipulated by various means, such as redistribution of productive assets, choice of location, or creation of an internal input market. A general formulation of the game is provided, and several applications are analyzed. We show that the optimal allocation of resources within an oligopoly can be asymmetric, even for ex-ante symmetric firms. This is an additional explanation of heterogeneity in oligopoly. Copyright 2001 by American Economic Association.

Environmental policy and the choice of production technology

It is often claimed that environmental taxation is a good policy instrument to reduce polluting emissions. The main argument is that emission taxes induce firms to adopt a cleaner production technology. The new technology, characterized by a lower emission/output ratio, becomes profitable, i.e. it is adopted by the firm, because taxes raise the operating costs of the original technology. However, emission taxes generally lead firms to reduce output and to raise prices1, thus reducing consumers’ surplus and possibly employment (this latter effect depends on the degree of substitutability of production factors, on the degree of competitiveness of the labour market, and on the way in which the tax is recycled; these issues are analyzed in Carraro-Galeotti-Gallo, 1994).

Learning-by-Doing and the Development of Industrial Districts

Marshallian districts are locales that accommodate a large number of small firms producing similar goads to be exported and benefit from the accumulation of know-how associated with workers residing there. We study the making of such districts by assuming that the cost function of a firm is a decreasing function of the total output produced in the past by the firms established in the locale. The dynamics is described by a sequence of temporary equilibria in which firms equalize profits between locales at each period. Hence changing the spatial distribution of firms affects the production history of each district. When new firms set up in a locale, they exacerbate competition on the corresponding labor market, thus leading to a wage rise that reduces the incentives for firms to locate in the most efficient district. The short-run equilibrium distribution of firms is studied as well as the long-run properties of the adjustment process, (C) 1999 Academic Press.

Environmental taxation, market share, and profits in oligopoly

Environmental taxation modifies the relative prices of production factors, thus inducing firms to adjust factor demand, production, investment, R&D, and other variables under their control. These price-induced effects are well known in economics. Therefore, it could be argued that economic theory has already provided the analytical tools to assess the impact of environmental taxation on a given industry. As the recent literature has shown, this is not always true.1 In particular, new problems arise when considering the international dimension of environmental taxation (see Carraro and Siniscalco, 1992). These problems are related to: industry asymmetry across countries, incentive to move capital and/or plants, coordination of environmental policy. Even when transboundary pollution is neglected, trade effects must be accounted for, when analysing environmental taxation (see Conrad’s article in this volume). New problems also arise in a domestic context, when introducing the environment in an endogenous growth model.

Variational Analysis in Psychological Modeling

This paper develops some mathematical models arising in psychology and some other areas of behavioral sciences that are formalized via general preferences with variable ordering structures. Our considerations are based on the recent variational rationality approach, which unifies numerous theories in different branches of behavioral sciences using, in particular, worthwhile change and stay dynamics and variational traps. In the mathematical framework of this approach, we derive a new variational principle, which can be viewed as an extension of the Ekeland variational principle to the case of set-valued mappings on quasimetric spaces with cone-valued ordering variable structures. Such a general setting is proved to be appropriate for broad applications to the functioning of goal systems in psychology, which are developed in the paper. In this way, we give a certain answer to the following striking question: in the world, where all things change (preferences, motivations, resistances, etc.), where goal systems drive a lot of entwined course pursuits between means and ends, what can stay fixed for a while? The obtained mathematical results and new insights open the door to developing powerful models of adaptive behavior, which strongly depart from pure static general equilibrium models of the Walrasian type, which are typical in economics.

R&D Spillovers and Location Choice under Cournot Rivalry

A model of location choice by Cournot oligopolists is presented, under the assumption that R&D spillovers depend on the distance between firms. We show that a variety of patters emerge. Agglomeration is optimal under certain assumptions. Geographical dispersion in a two- dimensional plane is another possible outcome.

Environmental taxation and employment in a multi-sector general equilibrium model

Environmental taxation has several drawbacks. Besides the usual criticisms, which often refer to the loss of competitiveness arising in countries which unilaterally adopt such a policy measure, and which call for an international coordination of environmental charges, new critical remarks have recently been raised. On the ground of efficiency,1 emission permits have been proposed to improve upon emission charges when agents’ intertemporal decisions (particularly on innovation) cannot be neglected (Laffont and Tirole, 1994). Moreover, when more than one externality has to be accounted for (e.g. in oligopoly, or in the presence of RD Carraro and Topa, 1994) . Similarly, information asymmetries (e.g. in non-point source pollution problems) ask for policy interventions far more complex than environmental taxation (Cf. Dosi and Graham-Tomasi, 1994) .

Lobbying for protection by heterogeneous firms

Abstract We show that total lobbying expenditure by domestic oligopolists is a function of the degree of heterogeneity of the industry, as well as of the demand condition. Sufficient conditions for big firms to contribute more (or less) than small firms are obtained. The effects of an increase in the degree of heterogeneity on lobbying expenditure are examined in two models of rent seeking.

Asymmetric Contributions to Research Joint Ventures

We show that ex ante identical oligopolists may find it optimal to contribute asymmetrically to a research joint venture. The reason is found in the trade-off between the desire to increase the variance of the distribution of unit costs within the oligopoly (which increases gross profit, though not necessarily net profit, of the group) and the incentive to efficiently carry out R&D activities by equalizing marginal R&D costs across firms. Conditions for non-existence of symmetric contributions are given. We also propose a profit sharing rule for asymmetric research joint ventures. JEL Classification Numbers: L13, L23.