Jean Jaskold Gabszewicz

Price competition, quality and income disparities

Abstract A market is considered, the demand side of which consists of a large number of consumers with identical tastes but different income levels, and the supply side, of two firms selling at no cost products which are relatively close substitutes for each other. Consumers are assumed to make indivisible and mutually exclusive purchases. A full characterization of the demand structure and the non cooperative market solution is given, and the dependence of the latter on income distribution and quality parameters is analyzed.

Entry (and exit) in a differentiated industry

The entry process in an industry embodying more or less close substitutes is considered. One examines whether the increase in the number of substitutes induces pure competition when prices are chosen noncooperatively. It is shown that there exists an upper bound on the number of firms which can compete in the market: when this upperbound is reached, any further entry entails the exit of an existing firm. In spite of this fact, new entries imply the decrease of prices to the competitive ones.

Press advertising and the ascent of the 'Pensée Unique'

The press industry depends in a crucial way on the possibility of financing an important fraction of its activities by advertising receipts. We show that this induces the editors of newspapers to moderate, in several cases, the political message they display to their readers, compared with the political opinions they would have expressed otherwise. To this end, we consider a three-stage game in which editors select sequentially their political image, the price of their newspaper and the advertising tariff they oppose to the advertisers. The intuition of the result lies in the fact that editors have to sell tasteless political messages to their readers in order to sell a larger audience to the advertisers.

Press Advertising and the Political Differentiation of Newspapers

The press industry depends in a crucial way on the possibility of financing an important fraction of its activities by advertising receipts. We show that this may induce the editors of the newspapers to moderate the political message they display to their readers, compared with the political opinions they would have expressed otherwise.

Two-sided markets and price competition with multi-homing

We model duopoly competition between two platforms.They operate in a two-sided market where agents are heterogeneous on both sides of the market and are allowed to mulithome. Network effects are captured within a vertical differentiation framework.Under single-homing there exists an interior equilibrium where networks exhibit asymmetric sizes and both firms enjoy positive profits.When all agents are allowed to patronize the two platforms, we show that in equilibrium multi-homing takes place on one side of the market only. Moreover, the only equilibrium exhibiting positive profits for both platforms replicates the collusive outcome.

Cournot-Walras Equilibria in Markets with a Continuum of Traders

SummaryIn a model with a nonatomic continuum of traders some of which behave strategically while the others remain price-takers, the set of Cournot-Walras equilibria coincides with the set of Walras equilibria. This property is no longer valid when the strategic agents are represented by atoms.

Bilingualism and Communicative Benefits

We examine patterns of acquiring non-native languages in a model with two languages and two populations with heterogeneous learning skills, where every individual faces a binary choice of learning the foreign language or refraining from doing so. We show that both interior and corner linguistic equilibria can emerge in our framework, and that the fraction of learners of the foreign language is higher in the country with a higher gross cost adjusted communicative benefit. It turns out that this observation is consistent with the data on language proficiency in bilingual countries such as Belgium and Canada. We also point out that linguistic equilibria can exhibit insufficient learning which opens the door for government policies that are beneficial for both populations.

On price competition with complementary goods

We consider a duopoly industry with two separate firms each selling an indivisible product. The joint consumption of these goods has a specific value for the consumers which exceeds the mere addition of utilities when products are consumed in isolation : the higher this excess, the larger the complementarity between the goods. We analyse price equilibria in this market as related to the degree of complementarity existing between the two products.

Social protection and political competition

This paper analyses how the level of social protection is determined when its choice depends on political competition. First, this is done under autarky. Then the analysis is extended to take account of the existence of an international capital market. We show that social protection never increases under international competition and, in several circumstances, drastically decreases.

Subjective price search and price competition

Abstract In this paper we study price rivalry between two firms facing a population of imperfectly informed buyers. The two sellers are geographically dispersed and consumers search for the lowest price. The competitive process either suffers from cyclical instability or stabilises at that price at which no buyer searches.