Barna Bakó

The Kreps-Scheinkman Game in Mixed Duopolies

In this paper we extend the results of Kreps and Scheinkman (1983) to mixedduopolies. We show that quantity precommitment and Bertrand competition yield Cournot outcomes not only in the case of private firms but also when a public firm is involved.

What can economics teach us about Santa Claus

In this paper we sketch a theory about the role of supernatural beliefs in incentivizing “good” behavior among children by parents. We present a simple theory on the production and the use of certain supernatural beliefs by parents to influence their children’s behavior. A prime example of this is the idea of Santa Claus and the idea that Santa Claus rewards children according to how well they have behaved during the year. We show that under standard conditions parents face a time inconsistency problem when trying to incentivize their offspring. We claim that the production of beliefs in certain supernatural or quasi-supernatural persons who allegedly have infinite lives can help parents discipline their children. Finally, we extend this logic to a community and its ruler or rulers. We show that rulers can have incentives to influence the beliefs of their subjects. This incentive is greater whenever the ruler is a monopolist and when he or she expects to rule for a long period. Rulers with limited ability and/or superior technology for producing beliefs will also supply more supernatural stories to enforce their rule.

Exclusive contracts in bilaterally duopolistic industries

In the prevailing literature on exclusive contracts it has been argued that manufacturers will engage in using exclusive contracts when products are undifferentiated, and will never sign such contracts, if the products are highly differentiated. This result, however, depends crucially on the fact that the upstream market is supposed to be monopolistic. The results change if we consider multiplayer upstream market. As we show in this paper, the manufacturers engage in exclusive contracting when the product differentiation is strong. In this case an exclusivity will solve the problem of contract externality. If the products are less differentiated the manufacturers experience a prisoner’s dilemma, where, by having an incentive to solve the externality problem, a unilateral switch leads to a lower profit. In this case manufacturers will offer non-exclusivity to the retailers.

The Role of Price Floor in a Differentiated Product Retail Market

The ability of a manufacturer to enhance competition among its retailers by im- posing a price oor was recently introduced in the literature. The purpose of this article is to revisit this anti-collusive explanation of the retail price maintenance in a more general model in which we introduce asymmetric retailers. We nd that a manufacturer can amplify the retail markets competition by imposing a price oor when retailers sell di erentiated products. This result contradicts the prevailing concept of retail price maintenance.