Publication database

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

We study a canonical model of simultaneous price competition between firms that sell a homogeneous good to consumers who are characterized by the number of prices they are exogenously aware of. Our setting subsumes many employed in the literature over the last several decades. We show there is a unique equilibrium if and only if there exist some consumers who are aware of exactly two prices. The equilibrium we derive is in symmetric mixed strategies. Furthermore, when there are no consumers aware of exactly two prices, we show there is an uncountable-infinity of asymmetric equilibria in addition to the symmetric equilibrium. Our results show the paradigm generically produces a unique equilibrium. We also show that the commonly-sought symmetric equilibrium (which also nests the textbookBertrand pure strategy equilibrium as a special case) is robust to perturbations in consumer behaviour, while the asymmetric equilibria are not.

We build a framework where firm size is a source of market power in a frictional labor market. The key mechanism is that a granular employer can eliminate its own vacancies from a worker’s outside option in the wage bargain. Hence, a granular employer does not compete with itself for workers. We derive a structural mapping from a microfounded concentration index to average wages. Using the framework in Austrian micro-data, we find that granular market power depresses wages by 9-13 percent and can explain 40 percent of the observed decline in the labor share from 1997 to 2015. Merging the two largest firms in every labor market depresses market-wide wages by six percent.

This working paper was also published in the IZA Institute of Labour Economics discussion paper series: https://www.iza.org/publications/dp/12574

Also available on SSRN.

In the absence of externalities, marginality is equivalent to an independence property that rests on Harsanyi‘s dividends. These dividends identify the surplus inherent to each coalition. Independence states that a player‘s payoff stays the same if only dividends of coalitions to which this player does not belong to change. We introduce notions of marginality and independence for games with externalities. We measure a player‘s contribution in an embedded coalition by the change in the worth of this coalition that results when the player is removed from the game. We provide a characterization result using efficiency, anonymity, and marginality or independence, which generalizes Young‘s characterization of the Shapley value. An application of our result yields a new characterization of the solution put forth by Macho-Stadler et al. (J Econ Theor, 135, 2007, 339-356) without linearity, as well as for almost all generalizations put forth in the literature. The introduced method also allows us to investigate egalitarian solutions and to reveal how accounting for externalities may result in a deviation from the Shapley value. This is exemplified with a new solution that is designed in a way to not reward external effects, while at the same time it cannot be assumed that any partition is the default partition.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

Betting on right technologies, selecting meaningful fields of application and thus steering technology developments with suitable properties in the right direction is crucial for the sustainable success of technology companies. However, due to the worldwide increase and rapid acceleration of research and development activities as well as the increasing integration of value chains, it is becoming increasingly difficult to correctly assess technology developments. At the same time, access to data and information has dramatically improved powered by the developments of the world wide web. Powerful information and telecommunication devices as well as software make large data sets easier to access and complex data analyses with new types of indicators possible. Thus, the possibilities of indicator-based technology assessments have also improved for companies that have very limited resources for technology analysis. In order to provide an up-to-date overview of which indicators and methods for technology analysis are currently used in practice and in science, the Chair of Innovation Management of the Free University Berlin conducted a survey of German-speaking experts* from business and science in November and December 2017. The results are presented in this report.