International Journal of The Economics of Business, Sep 2, 2014
ABSTRACT In their efforts to create and maintain a position in a market, firms make positioning i... more ABSTRACT In their efforts to create and maintain a position in a market, firms make positioning investments of various sorts, in R&D, plant, advertising, and location, or more generally, in product development and maintenance. In an environment where the success of positioning investments is stochastic, the positioning game played by firms that compete to serve a market is necessarily dynamic. We model the positioning and operating decisions of firms in an environment of this sort. When the market is large enough to support at least one active firm, in the steady state equilibrium, the expected number of firms serving the market at a point in time is a nearly continuous function of market size, in sharp contrast to the familiar integer-valued step function seen in classic models, and expected total and consumer surplus are higher than standard non-stochastic models would indicate. This suggests that the classic models are not always a sound guide for policy.
The author is indebted to GC Arehibald, Harry Bloch, CK Harley, and Philip Neher for insights int... more The author is indebted to GC Arehibald, Harry Bloch, CK Harley, and Philip Neher for insights into the nature of the problem discussed in this paper. Two referees have provided valuable suggestions for the revision and reorganization of the paper. A particularly heavy debt is ...
... demand model in which we argue that Sweezy deserves some credit for the consistent-conjectura... more ... demand model in which we argue that Sweezy deserves some credit for the consistent-conjectural variation idea ... we began to work on a paper on the theory of the second best, but we ... There were two exceptional students in the class, Bentley MacLeod and Mukesh Eswaran. ...
In this paper, the authors investigate the implications of flexible manufacturing for market stru... more In this paper, the authors investigate the implications of flexible manufacturing for market structure. In the received theory of market structure, based largely on inflexible techniques of production, a number of well-known forces work to limit concentration. In the authors' model, none of these forces exists. Hence, they conclude that flexible manufacturing promotes concentration through preemption and mergers, or equivalently
Trade, Technology and Economics represents a careful selection of papers from some of the worldâ€... more Trade, Technology and Economics represents a careful selection of papers from some of the world’s most influential economists of today reflecting areas in which Richard G. Lipsey has made fundamental contributions.
Can economically efficient outcomes be obtained and sustained in the absence of externally enforc... more Can economically efficient outcomes be obtained and sustained in the absence of externally enforced property rights? We study the evolutionary properties of a game that exhibits two well-defined Nash equilibria: one generates an inefficient outcome while the other set generates an efficient outcome supported by the potential for retaliation. Although standard forward-looking refinements eliminate the efficient equilibrium, neither equilibrium type satisfies strict evolutionary stability criteria. However, both types of equilibrium define strategies that are neutrally stable, which makes them vulnerable to drift in dynamic environments. We conduct computer simulation experiments in which players learn adaptively via a tournament selection mechanism called sophisticated experimentation. Our simulations demonstrate that while the system spends a disproportionately high proportion of time in the inefficient equilibrium set, the efficient equilibrium is pervasive as the system drifts bac...
Here we reproduce the table of contents and the introductory chapter to our book of related essay... more Here we reproduce the table of contents and the introductory chapter to our book of related essays published by Edward Elgar. 1 These essays deal with the important implications of allowing for the distribution of goods in characteristic space and of producers in geographic space. Although several of the essays in this book are frequently cited, the overall view of the economy that together they imply, and is given in the introduction, has seldom been cited, presumably because it was not published elsewhere as were most of the other essays. 2
Publisher Summary Any set of commodities closely related in consumption and/or in production may ... more Publisher Summary Any set of commodities closely related in consumption and/or in production may be regarded as differentiated products. Close relation in consumption depends on consumers' tastes. Elementary scientific methodology tells that theories aspiring to empirical relevance must be consistent with the observed facts. For this reason, awkward facts are to be welcomed; indeed, the more awkward they are, the greater are the constraints that they place on theorizing. Seven of the most important awkward facts that are available to constrain theorizing about product differentiation are described in the chapter. A complete model of product differentiation would specify (1) the set of possible products, (2) the technology associated with each product, (3) the tastes of consumers over the set of possible products, and (4) an equilibrium concept. There is little debate over the cost aspects of relevant models. Of the assumptions that are typically made, some are needed to accommodate one or another of the awkward facts, while others are employed merely for analytical convenience.
International Journal of The Economics of Business, Sep 2, 2014
ABSTRACT In their efforts to create and maintain a position in a market, firms make positioning i... more ABSTRACT In their efforts to create and maintain a position in a market, firms make positioning investments of various sorts, in R&D, plant, advertising, and location, or more generally, in product development and maintenance. In an environment where the success of positioning investments is stochastic, the positioning game played by firms that compete to serve a market is necessarily dynamic. We model the positioning and operating decisions of firms in an environment of this sort. When the market is large enough to support at least one active firm, in the steady state equilibrium, the expected number of firms serving the market at a point in time is a nearly continuous function of market size, in sharp contrast to the familiar integer-valued step function seen in classic models, and expected total and consumer surplus are higher than standard non-stochastic models would indicate. This suggests that the classic models are not always a sound guide for policy.
The author is indebted to GC Arehibald, Harry Bloch, CK Harley, and Philip Neher for insights int... more The author is indebted to GC Arehibald, Harry Bloch, CK Harley, and Philip Neher for insights into the nature of the problem discussed in this paper. Two referees have provided valuable suggestions for the revision and reorganization of the paper. A particularly heavy debt is ...
... demand model in which we argue that Sweezy deserves some credit for the consistent-conjectura... more ... demand model in which we argue that Sweezy deserves some credit for the consistent-conjectural variation idea ... we began to work on a paper on the theory of the second best, but we ... There were two exceptional students in the class, Bentley MacLeod and Mukesh Eswaran. ...
In this paper, the authors investigate the implications of flexible manufacturing for market stru... more In this paper, the authors investigate the implications of flexible manufacturing for market structure. In the received theory of market structure, based largely on inflexible techniques of production, a number of well-known forces work to limit concentration. In the authors' model, none of these forces exists. Hence, they conclude that flexible manufacturing promotes concentration through preemption and mergers, or equivalently
Trade, Technology and Economics represents a careful selection of papers from some of the worldâ€... more Trade, Technology and Economics represents a careful selection of papers from some of the world’s most influential economists of today reflecting areas in which Richard G. Lipsey has made fundamental contributions.
Can economically efficient outcomes be obtained and sustained in the absence of externally enforc... more Can economically efficient outcomes be obtained and sustained in the absence of externally enforced property rights? We study the evolutionary properties of a game that exhibits two well-defined Nash equilibria: one generates an inefficient outcome while the other set generates an efficient outcome supported by the potential for retaliation. Although standard forward-looking refinements eliminate the efficient equilibrium, neither equilibrium type satisfies strict evolutionary stability criteria. However, both types of equilibrium define strategies that are neutrally stable, which makes them vulnerable to drift in dynamic environments. We conduct computer simulation experiments in which players learn adaptively via a tournament selection mechanism called sophisticated experimentation. Our simulations demonstrate that while the system spends a disproportionately high proportion of time in the inefficient equilibrium set, the efficient equilibrium is pervasive as the system drifts bac...
Here we reproduce the table of contents and the introductory chapter to our book of related essay... more Here we reproduce the table of contents and the introductory chapter to our book of related essays published by Edward Elgar. 1 These essays deal with the important implications of allowing for the distribution of goods in characteristic space and of producers in geographic space. Although several of the essays in this book are frequently cited, the overall view of the economy that together they imply, and is given in the introduction, has seldom been cited, presumably because it was not published elsewhere as were most of the other essays. 2
Publisher Summary Any set of commodities closely related in consumption and/or in production may ... more Publisher Summary Any set of commodities closely related in consumption and/or in production may be regarded as differentiated products. Close relation in consumption depends on consumers' tastes. Elementary scientific methodology tells that theories aspiring to empirical relevance must be consistent with the observed facts. For this reason, awkward facts are to be welcomed; indeed, the more awkward they are, the greater are the constraints that they place on theorizing. Seven of the most important awkward facts that are available to constrain theorizing about product differentiation are described in the chapter. A complete model of product differentiation would specify (1) the set of possible products, (2) the technology associated with each product, (3) the tastes of consumers over the set of possible products, and (4) an equilibrium concept. There is little debate over the cost aspects of relevant models. Of the assumptions that are typically made, some are needed to accommodate one or another of the awkward facts, while others are employed merely for analytical convenience.
Classical thinkers like Bentham saw deterrence as a dynamic process in which the punishment of vi... more Classical thinkers like Bentham saw deterrence as a dynamic process in which the punishment of violators today helped deter potential violators in the future by increasing their subjective probability of apprehension. Modern deterrence theory took a different path, analyzing deterrence as a static equilibrium framework in which the subjective and objective probabilities of apprehension are equal. We follow Bentham's lead, assuming that the subjective probability is determined by the recent history of violations and apprehensions. Further, we assume that the objective probability is increasing in the quantity of enforcement resources and decreasing in the number of violations. Together these assumptions imply that deterrence is a dynamic stochastic process with the potential for disruptive positive feedback. We use simulation techniques to explore deterrence policy in a parameterized version of the more general process. We find that managing the dynamics of positive feedback is the core problem in developing and implementing effective deterrence policy. Our dynamic theoretical framework helps clarify and unify aspects of the research on optimal deterrence capacity, crime waves, and the efficacy of crackdowns and hot spot policing strategies.
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Papers by Curtis Eaton