Narrow Results

The impact of information improvement on local stability is examined for continuous dynamics. It is conventionally believed that removal of uncertainty always brings additional stability to an existing equilibrium. This paper shows that the relation between information and equilibrium stability may not be monotonic. Removal of information lag may sometimes destabilize the otherwise stable continuous model. Economic applications to Cournot and Bertrand competition are examined where the role of improved information on stability is shown to be cost-structure specific. Elimination of lags may cause stability loss. The conclusion drawn on two-dimensional continuous dynamics is briefly generalized to multidimensional system.

This paper presents a conceptual framework for analyzing the outcomes of potential competitive strategies and their expected payoffs for container terminal operators in the container handling industry. The framework is based on the integration of Bowley's linear model of aggregate demand of product differentiation with Porter's "Diamond" model. It focuses on the number of containers handled, prices charged, and profits earned to analyze a variety of strategies that could be employed by container terminal operators to enhance their competitive position. The findings suggest that strategies to build complementary relationships and stimulate greater demand are more desirable than alternatives because they generate benefits that accrue to the entire container port cluster. Conversely, strategies that are intended to raise entry barriers, employ strategic pricing mechanisms, and/or involve collusion are found to lead to the formation of insular clusters and retard competitive advantage in the long-run.

Despite the enormous growth in Islamic banking, most studies, using DEA/Stochastic Frontier Analysis, find Islamic banks are either equally or less productive than conventional banks. We apply the Olley–Pakes (OP) and Ackerberg–Caves–Frazer (ACF) approaches for estimating the production functions of conventional, Islamic and mixed banks in Bahrain and Malaysia between 1990 and 2011. The ACF results are the most plausible. Though Islamic banks tend to be less efficient than conventional banks the difference is not statistically significant. In Malaysia, mixed banks are significantly more productive than other banks and tend to have faster productivity growth.

In a North–South vertically differentiated duopoly we analyze (i) the effects of parallel import (PI) policies on price competition and (ii) the interdependence of national PI policies. Prices can be higher in the North if both countries permit PIs relative to when only the South does. If governments maximize national welfare and demand asymmetry across countries is sufficiently large, the North forbids PIs to ensure its firm sells in the South and international price discrimination — the South’s most preferred market outcome — obtains. When demand structures are relatively similar across countries, the North permits PIs and uniform pricing — its most preferred outcome — results.

We examine the consequences of foreign direct investment (FDI) policies in a general equilibrium setting with several oligopolistic industries. By shifting labor demand across countries, FDI raises the wage in the host country and lowers the wage in the source country, thereby raising profits of source country firms at the expense of host country firms. The extent of cross-ownership of firms, the relative number of firms and the relative supply of skilled labor alter the impact of FDI policy on national welfare. The tension between profits and wages determines whether the optimal policy is designed to encourage FDI.