Prabal Roy Chowdhury

A theory of joint venture life-cycles

Abstract In this paper we provide a dynamic theory of joint venture life cycle that relies on synergy, organisational learning and moral hazard. We demonstrate that depending on parameter values the outcome may involve any one of the following: stable joint venture formation, joint venture formation followed by breakdown, or Cournot competition in all the periods. We also provide some interesting welfare results.

Bertrand equilibria with entry: limit results

Abstract We study the limiting behaviour of Bertrand equilibria (where firms must supply the whole of the demand coming to them) for two different cases, first when entry is exogenous, and second when it is free. The limit equilibrium set is characterised for both cases for a large class of cost functions.

A Learning-Based Theory of Joint Venture Life-Cycles

We provide a two period, learning-based model of joint venture formation and breakdown. We show that depending on parameter values different dynamic patterns emerge. If the rate of learning is low, then a joint venture forms in both the periods. If the rate of learning is large, then the outcome may either involve joint venture breakdown, or delayed joint venture formation.We provide a two period, learning-based model of joint venture formation and breakdown. We show that depending on parameter values different dynamic patterns emerge. If the rate of learning is low, then a joint venture forms in both the periods. If the rate of learning is large, then the outcome may either involve joint venture breakdown, or delayed joint venture formation.

Bertrand-Edgeworth equilibrium large markets with non-manipulable residual demand

Abstract In a model of price competition among capacity-constrained firms with ‘non-manipulable’ residual demand, we demonstrate that if the number of firms is large, then the unique equilibrium yields the competitive price. The result goes through even when firms produce to order.

Bertrand-Edgeworth equilibria with unobservable output, uncoordinated consumers and large number of firms

Abstract We examine a Bertrand–Edgeworth model of price competition where the output levels of the firms are unobservable and consumers are uncoordinated. We show that if the number of firms is large enough then any price, greater than the competitive one, can be sustained as a pure strategy Nash equilibrium.

Inefficiencies in a Model of Team Formation

We consider a two period model with complete information involving three agents, two on one side of the market, and one on the other. The agents on the same side of the market bargain, among themselves, over whether to form a team or not, and also with the other agent, either singly or as a team, regarding the payoffs. We characterize the subgame perfect Nash equilibrium of this game. We find that the behavioral assumptions regarding the agents play a critical role in the outcome. If the agents are combative then the outcome is efficient. Whereas if the agents are peace loving, and the discount factor is large, then the outcome may involve delay, as well as (inefficient) team formation.We consider a two period model with complete information involving three agents, two on one side of the market, and one on the other. The agents on the same side of the market bargain, among themselves, over whether to form a team or not, and also with the other agent, either singly or as a team, regarding the payoffs. We characterize the subgame perfect Nash equilibrium of this game. We find that the behavioral assumptions regarding the agents play a critical role in the outcome. If the agents are combative then the outcome is efficient. Whereas if the agents are peace loving, and the discount factor is large, then the outcome may involve delay, as well as (inefficient) team formation.

Public–Private Partnerships, Corruption and Inefficiency

The chapter examines the formation of public–private partnerships (PPPs), one of the most important organizational forms to evolve over the last few decades. In particular, we analyse a possibility that has been relatively under-analysed in the literature, namely the possibility of collusion between the private firm and the governmental department in case of PPP formation. The chapter first develops a simple formal model based on risk sharing that is capable of analysing this issue. It then shows that PPPs are more likely to form in case the externality gains out of the project are significant, and the agents are quite risk averse. Otherwise, PPP formation may lead to bribery and sub-optimal project choice, and the government may opt for government control instead.