Boleslaw Tolwinski

R&D cooperation or competition?

Abstract The economic literature provides empirical evidence of the existence of technological cartels, such as research joint ventures or deliberate sharing of technological knowledge. Our aim is to answer to the questions: (i) is the creation of technological cartels beneficial from a social welfare point of view? and (ii) do the firms have private incentives to form such cartels? We depart from the approach adopted in the literature by considering a dynamic model and allowing for the possibility that the firms are asymmetric. The results show the importance of the degree of existing technological spillovers and stress the differences between the symmetric and asymmetric cases.

An application of social choice theory to U.S.D.A. forest service decision making

Abstract To meet the requirements of the National Environmental Policy Act of 1969, the U.S.D.A. Forest Service has changed the way forest plans are developed. The focus of this paper is to address the group-decision problem using social choice theory, specifically the voting models of Condorcet and Borda. The elements of a social choice problem are voters, alternatives, preferences, and aggregation. A case study from the Shoshone National Forest is used to demonstrate the use of the voting models from social choice theory. The solutions derived from the analysis are strategy and coalitional strategy proof implying that behaviors intended to influence the outcome, such as vote trading, would be unsuccessful.

Technology sharing cartels and industrial structure

Abstract The effects of “technology sharing cartels” on the behavior of firms and industrial structure are analyzed. Unit production costs are assumed to decrease with experience, which at any given time is proportional to the total production accumulated until that time. The “learning by doing” process is examined in a context of a duopolistic market, modeled as an infinite horizon dynamic game, for which subgame perfect (feedback) Nash equilibria are sought. Both symmetric and asymmetric oligopolies are examined. Since the models are non-linear and intractable by analytical techniques, equilibria are computed by using a computational procedure based on a policy iteration method.

Models for conflict resolution in ecosystem management.

Abstract Tools developed in the fields of decision analysis and game theory that have potential for use in public sector conflict resolution are reviewed. The strengths and weaknesses, as well as the axioms defining principles of fairness, are examined for multiobjective optimization, Nash and Nash–Harsanyi solutions, voting models, and the Shapley value. The case of conflict between stakeholders over proposed oil and gas leasing on National Forest System lands is presented as a sample application. We conclude that the Shapley value is the appropriate approach for determining the “fairness” of alternative conflict solutions, at least in those situations where cardinal utilities can be estimated.

On the Algorithm of Pollatschek and Avi-ltzhak

We present a modification of the Pollatschek and Avi-Itzhak’s algorithm for solving the discounted (and terminating), zero-sum, stochastic games. We call our algorithm the Modified Newton’s Method and demonstrate that it always converges to the value-vector of the stochastic game, and from an arbitrary starting point. The step-size in our method is selected according to the well-known Armijo’s Rule.

International negotiations on carbon dioxide reductions: A dynamic game model

Is there is a warming trend in the earths climate caused by an increase in concentrations of “greenhouse gases” in the upper atmosphere, it may be sensible to try to slow down that process by reducing emissions of greenhouse gases and, in particular, the emissions of carbon dioxide produced by the energy sector of world economies. For a number of reasons, a consensus on such reductions is difficult to reach. In this article, we model the problem as a dynamic game with national governments, or coalitions of such governments, as players. Clearly, the negotiations on worldwide reductions in CO2 emissions can succeed only if there exists a cooperative solution superior to the noncooperative one. According to our model, the existence of a collectively preferable cooperative solution depends on the degree of concern among national governments about negative impacts of increased CO2 concentrations. In addition to this unsurprising conclusion, the model can provide insights as to whose concerns will count most for the success of the negotiations and who will have to be induced by side payments to participate.

Learning by Doing and Technology Sharing in Asymmetric Duopolies

The existence of an experience curve for the firm has theoretical foundation in Arrow’s pioneering work (Arrow, 1962). The study of the learning-curve effect was initiated, however, almost thirty years earlier by Wright (1936). It was further developed by Alchian (1959), Hirschleifer (1962), Hirschmann (1964), and by an important work by the Boston Consulting Group (1972). The learning-curve phenomenon appears to be related, in the first place, to the introduction of new products. It has been observed that a doubling in accumulated production of a new product can result in a decline of unit costs by a factor of 10 to 50 percent of their initial level (Teng and Thompson, 1983). Empirical documentation concerning the learning curve can be found in several papers that appeared in the period from the early sixties to more recent years (e.g., Lundberg, 1961; Alchian, 1963; Hollander 1965; Zimmerman, 1982; Lieberman, 1984; Alder and Clark, 1991). This literature considers cost reduction as an outcome of experience and cumulative output is the variable commonly chosen to represent that experience. The revival of interest in the study of the learning curve can be attributed to some important recent contributions that suggest the existence of a link between learning by firms and incremental innovations in both production processes and products (see in particular Rosenberg, 1976; Nelson and Winter, 1982).

Numerical solutions to differential games based on approximations by Markov games

The dynamic programming equation arising in zero-sum differential games can be approximated by a sequence of finite-state Markov games that can be efficiently solved by a version of the modified policy iteration method. The authors use the approach to solve a combat problem related to the classical two-car game of R. Isaacs (Differential Games, Wiley, 1965). The results of this computational experiment indicate that the approach could be an effective tool for the solution of a variety of more complex models of conflict.<<ETX>>

Dynamic Games and Oligopoly Models of Technological Innovation

Since innovation is clearly a dynamic phenomenon, the process of technological innovation should be analysed by making use of a dynamic approach. In this paper we present two different models of innovation in the framework of an oligopolistic market and show that differential (or difference) games can provide an appropriate analytical tool to analyse this kind of problems. In this context it is possible to introduce state variables representing the technological knowledge accumulated by the firms over time and to link the innovation process to those variables. Equilibria in Markov strategies are computed by using a modified policy iteration algorithm.