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See detailStrategic Exploitation of a Common-Property Resource under Uncertainty
Koulovatianos, Christos UL; Antoniadou, Elena; Mirman, Leonard J.

in Journal of Environmental Economics and Management [= JEEM] (2013), 65(1), 28-39

We construct a game of noncooperative common-resource exploitation which delivers analytical solutions for its symmetric Markov-perfect Nash equilibrium. We examine how introducing uncertainty to the ... [more ▼]

We construct a game of noncooperative common-resource exploitation which delivers analytical solutions for its symmetric Markov-perfect Nash equilibrium. We examine how introducing uncertainty to the natural law of resource reproduction affects strategic exploitation. We show that the commons problem is always present in our example and we identify cases in which increases in risk amplify or mitigate the commons problem. For a specific class of games which imply Markov-perfect strategies that are linear in the resource stock (our example belongs to this class), we provide general results on how payoff-function features affect the responsiveness of exploitation strategies to changes in riskiness. These broader characterizations of games which imply linear strategies (appearing in an Online Appendix) can be useful in future work, given the technical difficulties that may arise by the possible nonlinearity of Markov-perfect strategies in more general settings. [less ▲]

Detailed reference viewed: 175 (121 UL)
See detailInvestment in a Monopoly with Bayesian Learning
Koulovatianos, Christos UL; Mirman, Leonard J.; Santugini, Marc

Report (2006)

We study how learning affects an uninformed monopolist's supply and investment decisions under multiplicative uncertainty in demand. The monopolist is uninformed because it does not know one of the ... [more ▼]

We study how learning affects an uninformed monopolist's supply and investment decisions under multiplicative uncertainty in demand. The monopolist is uninformed because it does not know one of the parameters defining the distribution of the random demand. Observing prices reveals this information slowly. We first show how to incorporate Bayesian learning into dynamic programming by focusing on sufficient statistics and conjugate families of distributions. We show their necessity in dynamic programming to be able to solve dynamic programs either analytically or numerically. This is important since it is not true that a solution to the infinite-horizon program can be found either analytically or numerically for any kinds of distributions. We then use specific distributions to study the monopolist?s behavior. Specifically, we rely on the fact that the family of normal distributions with an unknown mean is a conjugate family for samples from a normal distribution to obtain closed- form solutions for the optimal supply and investment decisions. This enables us to study the effect of learning on supply and investment decisions, as well as the steady state level of capital. Our findings are as follows. Learning affects the monopolist's behavior. The higher the expected mean of the demand shock given its beliefs, the higher the supply and the lower the investment. Although learning does not affect the steady state level of capital since the uninformed monopolist becomes informed in the limit, it reduces the speed of convergence to the steady state. [less ▲]

Detailed reference viewed: 29 (2 UL)
See detailThe Effects of Market Structure on Industry Growth: Rivalrous Non-excludable Capital
Koulovatianos, Christos UL; Mirman, Leonard J.

Report (2005)

We analyze imperfect competition in dynamic environments where firms use rivalrous but nonexcludable industry-specific capital that is provided exogenously. Capital depreciation depends on utilization, so ... [more ▼]

We analyze imperfect competition in dynamic environments where firms use rivalrous but nonexcludable industry-specific capital that is provided exogenously. Capital depreciation depends on utilization, so firms influence the evolution of the capital equipment through more or less intensive supply in the final-goods market. Strategic incentives stem from, (i) a dynamic externality, arising due to the non-excludability of the capital stock, leading firms to compete for its use (rivalry), and, (ii) a market externality, leading to the classic Cournot-type supply competition. Comparing alternative market structures, we isolate the effect of these externalities on strategies and industry growth. [less ▲]

Detailed reference viewed: 38 (2 UL)
See detailEndogenous Public Policy and Long-Run Growth
Koulovatianos, Christos UL; Mirman, Leonard J.

Report (2004)

. We study the determinants of voting outcomes on the provision of public consumption through marginal income taxes in the context of the simple linear growth model. We focus on how the dynamic ... [more ▼]

. We study the determinants of voting outcomes on the provision of public consumption through marginal income taxes in the context of the simple linear growth model. We focus on how the dynamic politicoeconomic equilibrium maps the economic fundamentals to policies and long-run growth. We find that in a deterministic growth environment voters internalize, although imperfectly, the deadweight losses of taxation and vote for lower taxes when the productivity of capital is higher. Therefore, the politicoeconomic channel reinforces the positive role of productivity for growth. In a stochastic environment, we find that if business cycles are driven by productivity shocks in the endogenous growth framework, equilibrium policies imply that taxes should fall in high growth periods and rise in low-growth periods. In line with existing evidence, our model predicts procyclical public consumption and countercyclical public consumption GDP shares. [less ▲]

Detailed reference viewed: 44 (1 UL)
See detailThe Effects of Market Structure on Industry Growth
Koulovatianos, Christos UL; Mirman, Leonard J.

Report (2004)

We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations ... [more ▼]

We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations, to show the effect of key ingredients of dynamic competition on firm strategies and industry dynamics in addition to the usual static interaction. These effects are the static market externality (implicit in the static Cournot Equilibrium) as well as the dynamic market externality due to the effect on the market outputs of a capital stock and a dynamic externality that stems from the competition between firms for the capital stock. These strategic elements justify our conclusions, based on the study of four market structures, for the link between industrial organization and industry growth [less ▲]

Detailed reference viewed: 49 (3 UL)
See detailR\&D Investment, Market Structure, and Industry Growth
Koulovatianos, Christos UL; Mirman, Leonard J.

Report (2003)

We study how alternative market structures influence market supply and R\&D investment decisions of firms operating in dynamic imperfectly competitive environments. Firms can reduce their future ... [more ▼]

We study how alternative market structures influence market supply and R\&D investment decisions of firms operating in dynamic imperfectly competitive environments. Firms can reduce their future production cost through R\&D investment today, which is the engine of endogenous industry growth. Our framework enables us to identify key strategic ingredients in firms dynamic competitive behavior through analytical characterizations. These ingredients are a static market externality, stemming from the standard oligopolistic Cournot competition, a dynamic externality that arises due to knowledge spillovers, and a dynamic market externality that comes from the interaction of knowledge spillovers with future market oligopolistic competition that firms internalize while making decisions. We isolate the impact of each strategic ingredient by comparing four alternative market structures. [less ▲]

Detailed reference viewed: 45 (1 UL)
See detailThe Effects of Market Structure on Industry Growth
Koulovatianos, Christos UL; Mirman, Leonard J.

Report (2003)

We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations ... [more ▼]

We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations, to show the effect of key ingredients of dynamic competition on firm strategies and industry dynamics in addition to the usual static interaction. These effects are the static market externality (implicit in the static Cournot Equilibrium) as well as the dynamic market externality due to the effect on the market outputs of a capital stock and a dynamic externality that stems from the competition between firms for the capital stock. These strategic elements justify our conclusions, based on the study of four market structures, for the link between industrial organization and industry growth. [less ▲]

Detailed reference viewed: 35 (3 UL)