António Brandão

Existence of a Markov perfect equilibrium in a third market model

Abstract We modify Maskin and Tirole’s [Maskin, E., Tirole, J., 1987. A theory of dynamic oligopoly, III. European Economic Review 31, 947–968] model to prove the existence of a Markov perfect equilibrium in a dynamic version of Brander and Spencer’s [Brander, J.A., Spencer, B.J., 1985. Export subsidies and market share rivalry. Journal of International Economics 18, 83–100] ‘third-market model’, introducing the government as a third player. We prove the existence of a Markov perfect equilibrium for any value of the discount factor.

A Moral Hazard Model of a Multinational Firm’s Decision between Foreign Direct Investment and International Subcontracting

This paper develops a moral hazard model applied to a multinational firm’s decision between foreign direct investment and international subcontracting. We compare the results of the moral hazard model, characterised by the fact that the multinational firm cannot control the operations performed by the subcontractor firm, with the traditional model of symmetric information. We conclude that the uncertainty associated with the subcontractor firm’s behaviour, despite increasing the multinational firm’s preference to engage in foreign direct investment, does not change its optimal decision, which is to subcontract. The exception occurs when the subsidiary stands as more efficient than the subcontractor firm.

On developing wellness and medical tourism: the characterization of a national termal network

Abstract Setting Thermal institutions are healthcare units where clinical activities such as consultations and treatments are carried out. Natural mineral water is an endogenous resource, which can only be enjoyed when recognized by the scientific community as a ‘medicine’, with proven results in the prevention and treatment of several pathologies. Thermal institutions combine several methods and treatment techniques, such as crenotherapy, the exterior shower, the internal shower, and immersion in hot tubs and thermal pools. Objective and design The present work focuses on the characterization of the Portuguese sector through its offers. Special attention was given to a set of variables, namely the type and number of health professionals involved in the thermal universe, the average costs of different available treatments, as well as the average comparative costs among the different management models carried out at Portuguese thermal institutions. Project and participants A questionnaire was designed and used as a tool to gather information on the above parameters in a representative sample corresponding to 20 national thermal institutions. Main outcome measure(s) This study showed that both the ‘classical’ and ‘wellness hydrotherapies’ are performed in the majority of thermalism institutions, which operate all year round (thus contradicting the traditional seasonality of the sector). Results There are a higher number of ‘physicians’ than ‘other health professionals’ at ‘private’ management thermal institutions, while the opposite trend is observed whenever the management is ‘public’. Conclusion The current study shows that most national thermal institutions dedicated to a specific forum do not have in their clinical board physicians in that specialty. Concerning other health professionals who currently are practicing their functions at national thermal institutions, this study indicates predominantly four professional categories: physiotherapists, nurses, balneotherapy technicians, and physiotherapy assistants. The cheapest thermal treatments include aerosols, nasal irrigation, and ‘vaporization’, and the most expensive ones include aquatic therapy, lymphatic drainage, general manual massage, respiratory exercise, and the Vichy shower.

Productivity Shocks in a Union-Duopoly Model: Productivity shocks in union-duopoly

We consider an industry where firms are asymmetric in terms of productivity. Wages and employment are determined at the firm-level and are the result of sequential bargaining between unions and firms, with wages being negotiated first. We characterise the equilibrium and compare the outcomes in the two firms (wages, employment and surplus of all economic agents). A productivity shock affecting the most efficient firm is socially desirable, by increasing the surplus of consumers, workers and firms. The same may not be true when the productivity shock affects the least efficient firm. In this case, the consumers’ gain may not be enough to outweigh the losses in aggregate worker surplus and in the industry profit.

Entry Regulation under Asymmetric Information about Demand

We investigate how an incumbent firm can use the regulatory policy about entry and the informational advantage to protect his market position. This question is studied through the construction of a signalling game where we assume that the regulator has less information about demand than the firms. We conclude that there is a pooling equilibrium and partially separating equilibria in which entry is deterred and, if demand is high, there will be insufficient entry. The final effect on welfare depends on the tradeoff between short-run benefits (lower price) and long-run losses (weaker competition).

A Signalling Model of Firms' Foreign Direct Investment Relocation Decision

Abstract We analyse whether the foreign government can influence the multinational firms relocation decision, through signalling the amount of subsidy it can grant. The foreign country is one of two possible types which differ on their investment conditions. Comparing the results obtained with an adverse selection model (the government knows the country type but the firm does not) with the results of a signalling model, we conclude that relocation is more likely, and the necessary subsidy is smaller, in the signalling model than with adverse selection. This can explain the proliferation of Investment Support Agencies worldwide.