A note on "Strategic trade policy design with asymmetric information and public contracts." (response to L. Brainard and D. Martimort, Review of Economic Studies, vol. 63, 1996, p. 81)

Article Abstract:

Inconsistencies in L. Brainard and D. Martimort's analysis of the unilateral-intervention game and implementation of the bilateral-intervention game were identified. Two important transversality conditions were absent. Both mu(sigma0) and mu(sigma1) must be zero. Since one of their solutions for mu(sigma) does not follow the provision that mu(sigma1) is zero, the solution cannot be considered optimal. Similarly, the equilibrium proposed by the authors in their analysis of the unilateral game is not an equilibrium because of governments have the option to unilaterally deviate.

Analysis, Interpretation and construction, Economic aspects, Trade policy, Commercial policy, Equilibrium (Economics), Public contracts, Government contracts

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Endogenous leadership in a new market

Article Abstract:

Strategic investments by two firms are investigated. These strategies are tested under uncertainty in a new market which resulted in a tradeoff between commitment and flexibility. Under general conditions, one firm chose to immediately invest and the other chose to wait-and-see even though both had identical entry opportunities. The preemptive investment strategy is less attractive because it is more costly and less effective. Results showed that firms had asymmetric sizes when the degree of uncertainty is close or lower than expected.

Financial Planning, Models, Investments

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• Abstracts: Costly distortion of information in agency problems. Competition and incentives with nonexclusive contracts. Hierarchical decentralization of incentive contracts

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