Tax Effects in a Model of Product Differentiation: A Note

We investigate how unit (or specific) tax and ad valorem tax affect equilibrium location choice in a model of product differentiation, which includes Hotelling (linear-city) and Vickrey-Salop (circular-city) spatial models as special cases. We find that neither tax affects equilibrium location patterns as long as each firm has the same production cost. Two taxes can yield different location patterns under cost heterogeneity among firms.     

Inefficient but Robust Public Leadership

We investigate endogenous timing in a mixed duopoly in a differentiated product market. We find that private leadership is better than public leadership from a social welfare perspective if the private firm is domestic, regardless of the degree of product differentiation. Nevertheless, the public leadership equilibrium is risk-dominant, and it is thus robust if the degree of product differentiation is high. We also find that regardless of the degree of product differentiation, the public leadership equilibrium is risk-dominant if the private firm is foreign. These results may explain the recent revival of public financial institutions in Japan.     

Mixed duopoly: Differential game approach

This study formulates a dynamic mixed oligopoly model, in which a state‐owned public firm competes against a private firm over multiple periods. We adopt a differential game formulated by Fershtman and Kamien [Econometrica 55 (1987), pp. 1151–1164] and investigate how the dynamic competition affects the optimal privatization policy. We characterize the open‐loop Nash equilibrium (OLNE) and Markov‐perfect Nash equilibrium (MPNE). We show that in the MPNE, an increase in the degree of privatization has a nonmonotonic effect on the price, increasing it in a wide range of parameter spaces, which is in sharp contrast to the result in the OLNE or static analyses. We also find that the optimal degree of privatization is higher in the MPNE than that in the OLNE and static equilibrium. These results suggest that intertemporal strategic behavior changes the optimal privatization policy.     

Comparison between specific taxation and volume quotas in a free entry Cournot oligopoly

We revisit the classic discussion of the comparison between tax and quota, but in a free-entry Cournot oligopoly. We investigate a quantity ceiling regulation as a quota policy. We find that tariff-quota equivalence holds if the firms are symmetric and the number of firms is given exogenously. However the equivalence does not hold and taxes dominate quotas in the free entry market because quota can increases the number of entering firms and increases the loss caused by excessive entries.     

Telling their own stories: Māori entrepreneurship in the mainstream screen industry

We examined how factors from Indigenous entrepreneurship research (social capital, cultural capital, self-efficacy) help explain the high level of Māori entrepreneurial performance in the mainstream screen industry. Results, based on ten case studies and a one-year series of structured interviews, extend prior research by showing that these Indigenous entrepreneurs benefit jointly from two forms of capital: cultural and social. We found high levels of both forms to increase the desire for emancipation of cultural and community identity – not just individual identity – through entrepreneurship. Self-efficacy and storytelling helped ameliorate discontinuities across Indigenous and mainstream contexts. Our research sheds new light on how Indigenous ventures can pursue mainstream entrepreneurship while maintaining cultural identity. It also makes several distinct contributions to the Indigenous entrepreneurship literature. First, it provides an integrative theoretic review. Second, it illustrates a culturally appropriate methodology for researching Māori entrepreneurs with implications for other Indigenous communities. Third, it proposes cultural capital and social capital as a two-part framework for explaining Indigenous entrepreneurial action. Fourth, it shows how entrepreneurship can be empowering for Indigenous communities. Finally, our paper demonstrates that entrepreneurship is a promising mechanism for preserving and promoting the cultures of Māori and other Indigenous peoples.     

COMPETITIVENESS AND STABILITY OF COLLUSIVE BEHAVIOR

We investigate the relationship between the degree of competition and the stability of collusive behaviour, by introducing the element of relative performance in the objective functions of the firms. We show that an increase in the degree of competition destabilizes the collusion. This relation differs starkly in the standard symmetric Cournot and Bertrand duopoly models, with the former being more unstable than the latter.     

ENDOGENOUS TIMING IN MULTI-STAGE DUOPOLY GAMES*

This paper presents an investigation of the endogenous timing in multi-stage duopoly games in which duopolists choose two variables over two periods. The paper elaborates the two-stage strategic commitment game discussed by Brander and Spencer (1983). Duopolists decide their outputs and cost-reducing investments and they are allowed to choose which action to take first. The paper discusses two types of games; one is a three-stage game in which each duopolist can commit to the order of choices before it chooses its output or cost-reducing investments, and the other is a two-stage game in which it cannot. The paper finds that at least one firm chooses its output first. Furthermore, the three-stage game has the unique equilibrium outcome in which both firms choose their outputs first.     

Profit-Enhancing Parallel Imports

We investigate competition between a domestic intellectual property right holder and a foreign imitator and consider how parallel imports affect their profits. We consider a two-country model. Country A is a developed country where intellectual property rights are highly protected, and country B is a developing country where protection is weak. The intellectual property right holder can sell the products for both markets while the imitator cannot export the products to country A. We find that permitting parallel imports can be beneficial for both players because it serves as a commitment device to soften price competition.