{"title":"Strategic Commitment with R&D: The Symmetric Case","authors":"James A. Brander, Barbara J. Spencer","doi":"10.2307/3003549","DOIUrl":"https://doi.org/10.2307/3003549","url":null,"abstract":"When research and development take place before the associated output is produced, imperfectly competitive firms may use R&D for strategic purposes rather than simply to minimize costs. Using a simple symmetric two-stage Nash duopoly model, we show that such strategic use of R&D will increase the total amount of R&D undertaken, increase total output, and lower industry profit. However, the strategic use of R&D introduces inefficiency in that total costs are not minimized for the output chosen. Nevertheless, net welfare may rise, and certainly rises if products are homogeneous, marginal cost is non-decreasing, and demand is convex or linear.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"2019 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121343452","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Dominant Firm Pricing Policy in a Market for an Exhaustible Resource","authors":"R. Gilbert","doi":"10.2307/3003589","DOIUrl":"https://doi.org/10.2307/3003589","url":null,"abstract":"The paper describes a von Stackelberg model of pricing behavior by a dominant firm in a market for an exhaustible resource. The results obtained differ dramatically from those that characterize a pure monopoly. If the marginal production cost in the competitive fringe is constant, the optimal dominant firm price strategy is independent of its own costs and is determined by the characteristics of the fringe. In contrast, if the production cost of the fringe is constant only up to a capacity constraint, the cartel may maximize profits by acting as a classical limit-pricing firm.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127366083","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Market Mechanism as an Incentive Scheme","authors":"O. Hart","doi":"10.2307/3003639","DOIUrl":"https://doi.org/10.2307/3003639","url":null,"abstract":"It is often argued that competition in the product market reduces managerial slack. We formalize this idea. Suppose that there is a common component to firms' costs, i.e., as one firm's (total and marginal) costs fall, so do those of other firms. Then when costs fall, profit-maximizing firms expand. This reduces product prices and gives the manager of a nonprofit-maximizing firm less opportunity for discretionary behavior than if his firm's costs had fallen alone and produce prices had not changed. Hence average managerial slack is lower under competition than if there is a single nonprofit-maximizing monopolistic firm.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"157 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127369995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Averch and Johnson proposition: a critical analysis","authors":"G. R. Corey","doi":"10.2307/3003173","DOIUrl":"https://doi.org/10.2307/3003173","url":null,"abstract":"The central thesis under consideration is the proposition by Messrs. Harvey Averch and Leland L. Johnson that \"if the rate of return allowed by the regulatory agency is greater than the cost of capital but is less than the rate of return that would be enjoyed by the firm were it free to maximize profit without regulatory restraint, then the firm will substitute capital for the other factor of production and operate at an output where cost is not minimized.\"","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123564417","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A.E. Kahn: The Economics of Regulation","authors":"G. Eads","doi":"10.2307/3003012","DOIUrl":"https://doi.org/10.2307/3003012","url":null,"abstract":"","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123808379","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The 'Ratchet Principle' and Performance Incentives","authors":"M. Weitzman","doi":"10.2307/3003414","DOIUrl":"https://doi.org/10.2307/3003414","url":null,"abstract":"The use of current performance as a partial basis for setting future targets is an almost universal feature of economic planning. This \"ratchet principle,\" as it is sometimes called, creates a dynamic incentive problem for the enterprise. Higher rewards from better current performance must be weighed against the future assignment of more ambitious targets. In this paper I formulate the problem of the enterprise as a multiperiod stochastic optimization model incorporating an explicit feedback mechanism for target setting. I show that an optimal solution is easily characterized, and that the incentive effects of the ratchet principle can be fully analyzed in simple economic terms.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"102 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125413578","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Incentive mechanisms for priority queuing problems","authors":"R. Dolan","doi":"10.2307/3003591","DOIUrl":"https://doi.org/10.2307/3003591","url":null,"abstract":"We consider the development of an incentive mechanism to induce users of a service facility to reveal the parameters the system administrator requires to determine the optimal sequence of service to queued users. We first consider using the taxation procedure recently suggested for public goods, and then develop a more efficient mechanism based on marginal delay costs. We prove that setting the priority price for service equal to the marginal delay cost imposed on others structures a situation such that a user maximizes his individual welfare revealing his true delay cost.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115030926","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Additive nonhomogeneous production functions in telecommunications","authors":"E. F. Sudit","doi":"10.2307/3003050","DOIUrl":"https://doi.org/10.2307/3003050","url":null,"abstract":"An additive form of a nonhomogeneous production function is suggested in this paper as a tool to study economic trends in production processes. This information allows for variable elasticities of substitution and for variable economies of scale, and is readily estimated by ordinary least squares. The marginal products are explicitly stated as a function of the input ratios. This additive nonhomogeneous functional form has been empirically tested on telecommunications data, related to Bell System, Western Electric, and Bell Canada production systems. Marginal products and elasticities have been computed and compared with the same series generated by a multiplicative nonhomogeneous form recently proposed by H.D. Vinod. Several similarities as well as major differences between the findings are cited and discussed. The author concludes that the additive formulation offers a more plausible description of some aspects of the Bell System and Bell Canada production processes than comparable findings generated by the multiplicative formulation.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115068764","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Risk Attitudes in the Telecommunications Industry","authors":"D. J. Laughhunn, Roy L. Crum, J. Payne","doi":"10.2307/3003652","DOIUrl":"https://doi.org/10.2307/3003652","url":null,"abstract":"It has been suggested in the economics literature that strongly risk-averse individuals may tend to gravitate toward large monopolistic firms rather than work for more competitive companies. In this article we provide results of an experiment designed to test this hypothesis. Operating managers from both regulated telecommunications firms and a broad cross section of unregulated industrial and service corporations were placed in the same controlled decision context to examine whether there are any systematic differences between telecommunications managers and their counterparts in nonregulated companies in their risk attitude toward losses.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115358103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Obligational Markets and the Mechanics of Inflation","authors":"M. Wachter, O. Williamson","doi":"10.2307/3003598","DOIUrl":"https://doi.org/10.2307/3003598","url":null,"abstract":"The issues that concern us are how wage and price-setting procedures vary with the nature of the good or service being exchanged and what the implications of different procedures for understanding the mechanics of inflation are. We argue that parties to nonstandardized (idiosyncratic) exchange have incentives to regularize trading relations, that this involves devising a governance structure to harmonize the exchange relation, that quantity rather than price bears the brunt of interim adjustments in these circumstances, and that long and variable price lags arise in this way. But while the effects of an inflationary disturbance are more spread out on this account -- which is to say that obligational market exchange relations does, however, complicate the problem of bringing an exogenous inflationary stimulus under control. Macroeconomics is thus linked with microeconomic contracting practices.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116092432","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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