We highlight conditions under which R&D agreements may harm consumers by increasing final prices. This occurs although members of the R&D agreement increase their R&D efforts. We focus on cases where firms compete both on the final market and to buy an input necessary for R&D. The market is composed of a competitive fringe and two strategic firms that enjoy a first mover advantage on both markets. By increasing its R&D input purchase, a strategic firm increases the cost of all its rivals and in particular deters entry in the fringe. This reduces downstream competition and increases the final price. Therefore, an R&D agreement may induce strategic overbuying of R&D input by members of the agreement at the expense of rival firms and consumers.

The impact of private benefits extraction on the values of oligopolistic firms is analyzed. Private benefits are assumed to generate costs which are passed through the organizational structure and create price distortion in the downstream product market. We prove that this may affect the profit (i.e. the market value) of the firms in a positive sense since the intensity of rivalry is curbed by the cost increase.

In oligopoly, private benefits extraction may enhance the profits while still generating a welfare loss: this suggests that corporate governance cannot be divorced from competition policy in industries where managerial opportunism generates expropriation costs.

Since the Lisbon agenda (2000), European policies are increasingly oriented towards R&D and innovation. In this context, we analyze the effects of a centralized R&D subsidy policy upon steady state and welfare using an agglomeration and growth model composed of two asymmetric countries. If the policy leads to a steady state characterized by a higher growth rate and lower inequalities, the welfare analysis provides a more contrasted vision on the effects of the policy. Indeed, even though such a policy can eliminate some distortions and improve global welfare, it implies a zero-sum game at national level (the policy increases the welfare in the periphery country and decreases the welfare in the core country) when knowledge spillovers are sufficiently localized. Consequently, a centralized R&D subsidy policy conducted in an economy composed of two asymmetric countries would be a positive-sum game only if international knowledge spillovers are sufficiently large.

This article appraises the effects of trade liberalization between two industries that have different endowments of skilled labor. Skilled labor is necessary for the production of higher-quality variants of a vertically differentiated good. Skilled labor endowments, therefore, determine the patternof specialization of industries as well as their market structure, both in the final goods market and in the labor market. We analyze how market integration benefits or harms the agents in the industries by delving into the linkages between labor and product markets, and show that bilateral losses from trade can emerge at equilibrium.

This paper addresses the role of markup variations in the transmission process of cross-sectoral productivity differential shocks and government spending shocks to the relative price of nontradables. The Balassa-Samuelson model based on frictionless goods markets predicts that a rise in the sectoral productivity ratio by 1% raises the relative price by 1% while government spending changes leave the relative price unaffected. Using panel cointegration and unit root tests applied to a panel of fifteen OECD economies, our empirical evidence does not support these implications. We find that a rise in relative productivity by 1% raises the relative price of nontradables by only 0.70% and that an increase in government spending by 1% of GDP drives up the relative price by around 1%. This paper shows that these items of evidence can be successfully explained by a two-sector open economy model in which variations in the composition of demand for nontradables give rise to endogenous changes in the markups.

In this paper, we reconstruct the main developments of the theory of noncooperative oligopoly in general equilibrium, by focusing on the analysis of three prototypical models for pure exchange economies: the model of Cournot-Walras equilibrium of Codognato and Gabszewicz (1991); the model of Cournot-Nash equilibrium originally proposed by Lloyd S. Shapley and known as window model; the model of Cournot-Walras equilibrium of Busetto et al. (2008). We establish, in a systematic way, the relationship between the three notions of equilibrium proposed in these models and the notion of Walras equilibrium. Then, we investigate the relationships among those three notions of equilibrium.

This article analyzes the effects of international trade policies on an imperfectly competitive domestic market, taking account of consumers, as well as upstream and downstream firms. We first study the impact of a classic import tax decrease and find that this policy harms upstream firms and may decrease domestic fiscal revenues. We then examine the effect of an increase in non-tariff barriers, which reduce the degree of substitutability between domestic and imported goods. This results in an improvement in each agent's situation, as international competition becomes less fierce. Finally, we show that market conditions may exist such that a coupled policy (import tax decrease and non-tariff barrier increase) makes all agents better off. This can explain the proliferation of domestic standards at national level in order to counterbalance the effect of lower tariffs negotiated by governments.

In this paper we study the Nash equilibrium in a smooth public goods economy, described as a non-cooperative game, where the set of players is a mixed measure space of consumers. We assume a finite number of private goods. We show that under certain conditions there exists a unique Nash equilibrium in the economy, where the public goods are produced with a linear technology. Moreover, we discuss the difference in market power between an atomless sector and an atom with the same utility function, and an atom with its split atomless sector, both in a pure exchange economy and a public goods economy.

This paper examines the question as to whether, before 1914, French savers bought foreign assets to gain higher foreign returns or because of low correlation. Using tools of the Modern Portfolio Theory, the benefit from international diversification is decomposed into these two components, using a counterfactual hypothesis of perfect correlation between two assets. This approach allows an original measure of the respective share of the higher foreign returns and the low correlation in the benefit of diversification. The argument is put forward that French investors were mainly attracted by weak foreign correlation with domestic assets, rather than higher foreign returns.

L'innovation est devenue un facteur clé de la croissance économique. La question des incitations à l'innovation au sein des entreprises est donc primordiale. Dans ce papier, nous nous intéressons au type d'incitations monétaires reçues par les inventeurs au sein des entreprises avec une attention particulière à la mobilité inter-entreprise de ces derniers. Les résultats montrent un rendement salarial positif pour les inventeurs, celui-ci est plus important pour les inventeurs ayant connu une mobilité inter-entreprise, ce qui pourrait suggérer que les entreprises sont prêtes à payer les connaissances acquises par les inventeurs au sein des autres entreprises. Par contre, l'utilisation de stock-options comme incitation pour les inventeurs semble moins répandue dans les entreprises françaises que dans les entreprises étrangères.

The economic and financial crisis has meant sizeable employment losses that resulted from different adjustment mechanisms in domestic firms and multinational companies. This may be due to either production plant closures or downsizing by firms that remain active. This paper evaluates the importance of both phenomena for multinational and domestic firms in Belgium over the period preceding the crisis (1997-2008), using a firm-level dataset. Our results reveal that multinational enterprises tend to leave the local market more frequently than domestic firms with comparable firm and sector characteristics. Further, multinational incumbents face employment adjustment costs for white-collar workers that are around half of those borne by domestic firms. In sum, our findings suggest that multinational firms are more flexible in terms of plant location as well as in terms of employment adjustment. However, before the crisis, foreign multinationals created more jobs on average than other types of firms.

Dans cet article, nous analysons la structure des coûts d'alimentation en eau potable des villes de Côte d'Ivoire à partir d'un panel des centres de production. Considérant les services d'eau comme des monopoles multi-produits fournissant conjointement deux biens (volumes d'eau facturés et volumes d'eau perdus), nous estimons une fonction de coût translog multi-produits sur la base de la dualité entre fonctions de production et de coût. Les différentes mesures de rendements calculées révèlent que le service d'eau moyen ivoirien produit dans la zone des rendements constants. Cependant, en classant les services en petits, moyens et grands selon différents critères, il apparaît clairement que l'opérateur a un avantage économique à accroître sa production et les connections dans la plupart des petits et moyens services. Aussi, la présence d'économies de gamme révèle que la production conjointe des deux biens considérés dans certaines proportions est plus bénéfique que l'amélioration du rendement du réseau. Enfin, les évaluations des coûts estimés font apparaître un coût marginal supérieur en moyenne aux prix marginaux des premières tranches de la grille tarifaire.

Nous considérons une prise de contrôle dans laquelle les motivations des repreneurs potentiels sont multiples et étudions I’impact du degré d’affiliation de leurs évaluations sur la stratégie optimale. Nous montrons que cet impact dépend du rapport des dotations initiales. Nous trouvons que lorsque les dotations initiales sont symétriques, la stratégie optimale des enchérisseurs est indépendante du degré d’affiliation de leurs évaluations. En revanche, lorsque les dotations initiales sont asymétriques, cet impact dépend du niveau du signal privé de l’enchérisseur. Si les acqueréurs potentiels surenchérissent en présence de dotations initiales, l’étendue de la surenchére décroît avec l’augmentation du degré d’affiliation lorsque le signal privé est inférieur un certain seuil. L’agressivité des enchérisseurs profite à la firme cible dont le revenu espéré augmente avec le degré d’affiliation des évaluations.

The purpose of this paper is to investigate the mutual compatibility of voluntary provision of public good and strategic behavior of consumers in the market for private goods. We study the existence of equilibrium private provision of a public good within general strategic equilibrium framework with a finite number of players. The mechanism for the provision of public good follows the one due to Bergstrom, Blume and Varian (1986) and the trading mechanism for private goods follows the strategic market game with wash sales due to Dubey and Shubik (1986). The new result of the paper is the demonstration of existence of an equilibrium point in pure strategies for finite number of players. Due to the existence of trivial equilibria at which all markets are closed, equilibrium points are constructed as limits of sequences of ε- equilibria of perturbed games.

In this paper, we reconsider two models of noncooperative oligopoly in general equilibrium proposed by Busetto et al. ((2008), (2011)): a version of the Shapley's window model for mixed exchange economies a la Shitovitz and its reformulation a la Cournot-Walras. We introduce the assumption that preferences of the traders belonging to the atomless part are represented by Cobb-Douglas utility functions. This assumption permits us to prove the existence of a Cournot-Nash equilibrium of the Shapley's window model - called Cobb-Douglas-Cournot-Nash equilibrium - without introducing further assumptions on atoms' endowments and preferences previously used by Busetto et al. (2011). Then, we show that the set of the Cobb-Douglas-Cournot-Nash equilibrium allocations coincides with the set of the Cournot-Walras equilibrium allocations.