Banking (conservatively) with optimists

Article Abstract:

A game-theoretic model of the screening problem faced by bankers when distinguishing realistic entrepreneurs from optimists who are overconfident about their investment projects is developed. It is observed that although entrepreneurs may show self-restraint to reflect realism, competition may lead banks to be insufficiently conservative in their lending, thereby reducing capital market-efficiency. Bank regulation and bankruptcy rules with regard to the problems that optimistic entrepreneurs present are also discussed.

Management, Finance, Entrepreneurship, Bank loans

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Revisiting dynamic duopoly with consumer switching costs

Article Abstract:

An infinite-horizon model of duopolistic competition is developed to examine collusion in a market with consumer switching costs. It is shown that stationary Markovian strategies adopted by firms result in the relaxation effect of switching costs on the strength of competition. These findings were obtained without making auxiliary assumptions. It is demonstrated that collusion may not be sustained in a market with large switching costs than in a market with no switching costs.

Research, Price fixing, Duopolies

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Strategic incentives in dynamic duopoly

Article Abstract:

Taxonomy of strategic incentives arising in duopolistic interaction over an infinite horizon of adjustment costs is described. A critical characterization of dynamics of cost behaving strategically shows effects of the price levels and inflation persisting in an organization.

Public Finance Activities, Forecasts, trends, outlooks, Tax Administration, Models, Forecasts and trends, Tax administration and procedure, Market trend/market analysis, Cost (Economics), Costs (Economics)

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