Daniel J. Seidmann

A strategic motivation for commodity bundling

The analytical literature on commodity bundling explains the practice of selling two or more differentiated products in a single package as a surrogate for direct price discrimination. In contrast, this paper shows that imperfect competition creates a strategic incentive to bundle. The profitability of bundling, whether it adversely affects rival producers, and whether it yields an overall efficiency gain depends inter alia on the nature of product market competition. The role of complementarity in explaining why firms bundle is also explored. Copyright 1990 by Blackwell Publishing Ltd.

Bundling as a Facilitating Device: A Reinterpretation of Leverage Theory

Tying-good monopolists that extract full consumer surplus from independent sales of their tying good may, nevertheless, choose to bundle in order to induce a favorable response by their tied-market rivals. In particular, bundling may facilitate supracompetitive prices for the tied good. Copyright 1991 by The London School of Economics and Political Science.

Effective cheap talk with conflicting interests

Abstract Cheap talk may influence a receivers equilibrium actions even if all of the senders types share a common preference ordering over the receivers actions, contrary to the impression conveyed by Crawford and Sobels seminal work on cheap talk in games in which the receivers interest almost coincides with that of each sender-type.

A Theory of Voting Patterns and Performance in Private and Public Committees

We compare play in private and public committees when insiders care both about how well the committee decision serves organizational goals, and about the rewards which outsiders give for representing their interests. We show that a private committee reaches decisions which better serve organizational goals than either a public committee or the median insider choosing alone; and that a committee can only exhibit a norm of consensus if insiders vote in private. Finally, any insider who does not vote for a private committee’s decision must vote for a decision which better serves organizational goals; whereas a dissident in a public committee votes for a decision which worse serves organizational goals.

Bargaining over an endogenous agenda

We present a model of bargaining in which a committee searches over the policy space, successively amending the default by voting over proposals. Bargaining ends when proposers are unable or unwilling to amend the existing default, which is then implemented. We characterize the policies which can be implemented from any initial default in a pure strategy stationary Markov perfect equilibrium for an interesting class of environments including multi-dimensional and infinite policy spaces. Minimumwinning coalitions may not form, and a player who does not propose may nevertheless earn all of the surplus from agreement. The set of immovable policies (which are implemented, once reached as default) forms a weakly stable set; and conversely, any weakly stable set is supported by some equilibrium. If the policy space is well ordered then the committee implements the ideal policy of the last proposer in a subset of a weakly stable set. However, this result does not generalize to other cases, allowing us to explore the effects of protocol manipulation. Variations in the quota and in the set of proposers may have surprising effects on the set of immovable policies. We also show that equilibria of our model are contemporaneous perfect e-equilibria of a related model of repeated implementation with an evolving default; and that immovable policies in semi-Markovian equilibria form the largest consistent set.

Cheap talk games may have unique, informative equilibrium outcomes

Abstract We demonstrate that cheap talk games can have unique, informative equilibrium outcomes by providing an example of an infinite-action Bayesian game which, absent cheap talk, does not possess an equilibrium.

Corruption and power in democracies

We study the implications of Acton’s dictum that power corrupts when citizens vote (for three parties) and governments then form in a series of elections. In each election, parties have fixed tastes for graft, which affect negotiations to form a government if parliament hangs; but incumbency changes tastes across elections. Our model entails various plausible predictions about long-run patterns of government. Acton’s dictum results in possible government turnover, and in different predictions about possible government composition: for example, that the grand coalition may form.

Organizational Change and Hysteresis in British Manufacturing Industry: A Perspective from the Donovan Commission Report

Labor productivity in British manufacturing industry rose significantly during the severe recession of the early 1980s, contrary to historical and international parallels. Furthermore, labor productivity continued to rise during the rest of the decade despite the return of output to its pre-1980 level. The author explains these stylized facts by analyzing wage-work rule negotiations as a three-person noncooperative bargaining game in which workers with different skills negotiate independently. This model attempts to capture the insights of a Royal Commission on industrial relations. The author also argues that this explanation of the stylized facts is consistent with the available evidence. Copyright 1995 by The London School of Economics and Political Science.

Optimal Quotas in Private Committees

According to conventional wisdom, raising the quota either causes a committee to retain the status quo or has no effect on its performance; so a committee which would otherwise reach good decisions should operate with a low quota. We show, per contra, that reducing the quota may improve the quality of new decisions which a private committee reaches. In particular, it is optimal to reduce the quota of a committee which would otherwise reach good decisions, despite the failure of conventional wisdom.

Target buffer stocks

The behaviour of a buffer stock-holding firm facing stationary demand shocks is considered from the viewpoint of recent evidence on inventories and price-setting. Attention is focussed on the responses of price and supply to changes in autonomous demand, and compared with those of a nondurable producer. The results conflict with recent theoretical work in providing support for a Keynesian interpretation of inventory series.