International Journal of Economic Theory最新文献

In a market with discrete prices, the seller provides verifiable information to buyers with privately known tastes, possibly horizontally differentiated. We present a necessary and sufficient condition, called the unraveling criteria, to achieve effective unraveling at every prudent rationalizable outcome, which extends pairwise monotonicity in a more general framework. The unraveling criteria are satisfied if we can rank seller types from the ones with the highest to the ones with the lowest sales at every price, reminiscent of vertical differentiation. We observe that cautiousness, embodied in prudent rationalizability, plays a specific role in achieving effective unraveling.

In this paper, we examine the findings on tax pass-through and tax incidence in a differentiated duopoly when the owner of each firm hires a biased manager. We first show that irrespective of the mode of product market competition, the tax pass-through and tax incidence are higher when owners hire biased managers compared to the case of no delegation. We then consider the issue of tax pass-through and tax incidence when the owners understate the profit to lower the tax liability. Surprisingly, we find that when firms understate their profit, hiring biased managers further amplifies the tax pass-through and tax incidence under an ad valorem tax. However, the results remain the same under specific taxes.

In this paper, we investigate the issue of privatization in a mixed duopoly with vertical differentiation under Cournot and Bertrand competition. The public firm is assumed to produce a lower-quality product with lower production costs. We find that under both Bertrand and Cournot competition, privatization is socially desirable (undesirable) if the quality level of the private firm is sufficiently high (low). However, if the quality of the private firm is intermediate, Bertrand and Cournot competition yields opposite policy implications: privatization is desirable under Bertrand competition while undesirable under Cournot competition. Therefore, under Bertrand competition, privatization is more likely to be welfare-improving than under Cournot competition.

On the basis of a simple two-player bargaining game model, we investigate whether a side-payment strategy can be used to avoid costly conflicts caused by informational barriers. Assuming that utility is transferable with zero transaction cost, we demonstrate that a side-payment not only provides the incentives to play a peaceful strategy but also contributes to overcoming informational barriers as credible signals. In addition, we show that when actions are strategic complements, a dovish player pays a larger side-payment while a hawkish pays a higher side-payment if actions are strategic substitutes. When negotiating parties are homogeneous with actions being either strategic complements or substitutes for both players, it is more likely that informational barriers can be removed with a higher probability of peace equilibrium. When players are asymmetric with one player's actions being strategic complements while the other player's being strategic substitutes, informational barriers might not be removed with higher chances of costly conflicts.

We study the lifecycle aspect of within-country inequality that stems from capital and labor services supplied by individuals. Our environment is a combination of a multicountry trade model and an overlapping generations model with production and capital accumulation. Trade liberalization increases the measured total factor productivity in each country, which increases the marginal product of capital and incentivizes capital accumulation. Higher capital stock and higher measured productivity raise the marginal product of labor and, hence, wages. Inequality, measured by the ratio of old agents' income to young agents' income, evolves over time due to capital accumulation during the transition from autarky to an open-economy world. Immediately after liberalization, inequality increases. Over time, capital accumulates at a diminishing rate and inequality declines.

This paper studies the trade-induced reallocation of resources beyond the conventional partition in trade models. It challenges the typical partition of firms into domestic-only and trading entities. The paper demonstrates that reallocation across heterogeneous firms can occur without such dichotomous partitioning. For reallocation to happen, firms must have different exposure to international markets. The paper uses offshoring models with labor market frictions to illustrate this principle. The offshoring model reveals that labor market frictions induce variations in wage and offshoring intensity. These variations then lead to differential impacts from offshoring cost shifts, resulting in reallocation across heterogeneous firms without partition.

This paper studies public information disclosure in games with rationally inattentive players. We establish how the existence of an optimal sender's strategy depends on the nature of the receivers' information cost. When the receivers' cost is strongly Uniformly Posterior Separable (UPS), selecting the sender's most preferred equilibrium (SPE) for every interim belief guarantees a solution to the information design problem. We provide an example with a (non-strongly) UPS cost function in which an optimal sender's strategy does not exist despite the selection of the SPE.

This paper constructs green managerial delegation contracts in a mixed duopoly wherein either or both public and private firms may adopt environmental corporate social responsibility (ECSR). We demonstrate that the public (private) firm owner positively (negatively) adopts ECSR incentives under Cournot, whereas the incentives are reversed under Bertrand. We also examine an endogenous ECSR choice game and discover that unilateral ECSR adopted by a public firm appears under Cournot, whereas bilateral ECSR where both firms adopt ECSR incentives appears under Bertrand. Our findings show that coordination of competition mode may be harmful to society if both marginal damage and product substitutability are sufficiently high.