Multidimensional mechanism design: Revenue maximization and the multiple-good monopoly

The seller of N distinct objects is uncertain about the buyer's valuation for those objects. The seller's problem, to maximize expected revenue, consists of maximizing a linear functional over a convex set of mechanisms. A solution to the seller's problem can always be found in an extreme point of the feasible set. We identify the relevant extreme points and faces of the feasible set. We provide a simple algebraic procedure to determine whether a mechanism is an extreme point. We characterize the mechanisms that maximize revenue for some well-behaved distribution of buyer's valuations.     

The convergence of equilibrium strategies of approximating signaling games

Summary For a class of infinite signaling games, the perfect Bayesian equilibrium strategies of finite approximating games converge to equilibrium strategies of the infinite game. This proves the existence of perfect Bayesian equilibrium for that class of games. It is well known that in general, equilibria may not exist in infinite signaling games.I am very grateful to Karl Iorio with whom I derived most of the results in this paper. I am solely responsible for any remaining errors. I am also grateful to Robert Anderson, Debra Aron, Eddie Dekel, Raymond Deneckere, Michael Kirscheneiter, Steven Matthews, Roger Myerson, Daniel Vincent and Robert Weber for comments on previous drafts of this paper.     

Accelerators as start-up infrastructure for entrepreneurial clusters

ABSTRACT

Infrastructure is commonly conceptualized as a set of facilities that play a critical role in facilitating activities by individuals and organizations. Conventionally, infrastructure is tightly linked to publicly funded projects that facilitate access to key resources and enable diverse activities. Within entrepreneurial clusters research, infrastructure includes universities, research institutions and telecommunication technologies that facilitate entrepreneurial activities. These capital-intensive investments seek to facilitate start-ups emergence by aiding access to markets and development of ideas. Accelerators facilitate the same activities and have only recently been conceptualized as start-up infrastructure. This study builds upon this research stream by elaborating on how accelerators can play this meaningful role at the cluster level. Specifically, and by relying on the analysis of empirical evidence from three distinct studies, we uncover how accelerators provide tangible and intangible dimensions of start-up infrastructure to form a positively reinforcing cycle of entrepreneurial activities. Additionally, our findings allow us to push further the idea that start-up infrastructure development can be an endogenous process involving multiple actors within the cluster. Our empirical findings and the theoretical insights derived from them have meaningful implications for the aforementioned literature, as well as start-up practitioners and policymakers linked to the funding of entrepreneurial clusters.     

Oil risk contracts,business conduct and performance patterns: Data panel analysis

Using the economic and financial performance data of international companies for the exploration, and exploration–extraction (E&E) of oil, as well as the patterns of institutional situation and orientation with the government market and national oil companies or NOCs that receive project offers, we analyze the institutional development and behavior patterns by type of E&E contract, following the strategic actor approach, or the so-called agency theory. Additionally, in light of Mexico's energy reform being implemented between 2015 and 2019, we analyzed the types of license contracts compared to those for production and shared profit. Subsequently, it was determined-through panel data methods in the analysis of 17 companies between 2005 and 2015-that global companies present bigger yields and commitments compared to specialized companies, confirmed by their net income and returns on equity or ROE.     

Multi-product capacitated facility location problem with general production and building costs

This research introduces the multi-product capacitated facility location problem with general production and building costs (MP-CFLPGC). The MP-CFLPGC extends previous problems found in the literature by including multiple products and general production and building cost functions that allow the modeling of different behaviors like economies of scale and congestion. The MP-CFLPGC is formulated as a mixed integer linear program (MILP). To evaluate the performance of the proposed formulation we analyze the results of a commercial optimizer on a set of 288 randomly generated test instances that resemble the Colombian cement industry supply chain. After one hour the optimizer achieved an optimality gap of 1.0 % or less in 55 % out of the 288 test instances. On average the optimality gap was 3.57 %. Additionally, we propose a randomized mathematical-programming-based heuristic for the test instances where the MILP formulation presents significantly high optimality gaps.     

Structural shocks and dynamic elasticities in a long memory model of the US gasoline retail market

A structural multivariate long memory model of the US gasoline market is employed to disentangle structural shocks and to estimate the own-price elasticity of gasoline demand. Our main empirical findings are: (1) there is strong evidence of nonstationarity and mean reversion in the real price of gasoline and in gasoline consumption; (2) accounting for the degree of persistence present in the data is essential to assess the responses of these two variables to structural shocks; (3) the contributions of the different supply and demand shocks to fluctuations in the gasoline market vary across frequency ranges; and (4) long memory makes available an interesting range of convergent possibilities for gasoline demand elasticities. Our estimates suggest that after a change in prices, consumers undertake a few measures to reduce consumption in the short- and medium-run but are reluctant to implement major changes in their consumption habits.     

When is escalation of commitment unstoppable in group settings? An iterative economic modeling approach to unveil the dark side of group decision-making

Escalation of commitment (EOC) has been usually studied from a psychological lens, and only recently have scholars approached EOC from an economic perspective. We contribute to this by focusing on iterative decision-making in group settings with a game theory approach. We study how the group members' strategic interaction may result in continuing failing courses of action. Drawing on the Byzantine generals' problem, our model considers an iterative decision-making process where committee participants vote based on private information to escalate or not. Our article demonstrates that if decision-makers reset their beliefs based on the committee's previous decision, then EOC becomes perpetual.     

Going multilateral? Financial markets' access and the League of Nations loans, 1923–8

Why are international financial institutions important? This article reassesses the role of the loans issued with the support of the League of Nations. These long‐term loans constituted the financial basis of the League's strategy to restore the productive basis of countries in central and eastern Europe in the aftermath of the First World War. In this article, it is argued that the League's loans accomplished the task for which they were conceived because they allowed countries in financial distress to access capital markets. The League adopted an innovative system of funds management and monitoring that ensured the compliance of borrowing countries with its programmes. Empirical evidence is provided to show that financial markets had a positive view of the League's role as an external, multilateral agent, solving the credibility problem of borrowing countries and allowing them to engage in economic and institutional reforms. This success was achieved despite the League's own lack of lending resources. It is also demonstrated that this multilateral solution performed better than the bilateral arrangements adopted by other governments in eastern Europe because of its lower borrowing and transaction costs.     

How do Agricultural Programmes Alter Crop Production? Evidence from Ecuador

Evaluating agricultural programmes requires considering not only the programmes’ influence on input and output indicators, but also considering the relationship between these indicators as embodied in the production technology. This article examines the impact on production of an intervention in the Ecuadorian Sierra designed to improve returns to potato production through training and through linking smallholders to high‐value markets. Critical to identifying the impact of the programme is the careful construction of a counterfactual and meticulous data collection. To assess the impact of the programme on production, a weighted estimation, where weights are constructed through propensity score matching, is employed to estimate a production function within a damage abatement framework. The function incorporates a series of interaction terms to assess the impact of the programme on the production technology. The findings provide evidence that the programme enhances yields both through a general shift in technology as well as increased input use. The results suggest that the use of effective farming techniques that are learned through the programme induce this technological shift.