European Center for Advanced Research in Economics and Statistics

Title : Oligopoly,Complementarities, and Transformed Potentials

Abstract : We adopt a potential games approach to study multiproduct-firm pricinggames. We introduce the new concept of transformed potential and characterizethe classes of demand systems that give rise to pricing games admitting such apotential. The resulting demand systems may contain nests (of closersubstitutes) or baskets (of products that are purchased jointly), orcombinations thereof. These demand systems allow for flexible substitution patternsand can feature product complementarities arising from joint purchases andsubstitution away from the outside option. Combining the potential gamesapproach with a competition-in-utility approach, we derive powerful results onexistence of pure-strategy Nash equilibria.

Title: Positive tipping points ans transitional dynamics : policies for the green transition

Abstract: Using a dynamic model in which heterogenous consumers make forward-looking choices between brown and green durable goods, we establish conditions under which peer effects lead to multiple steady states and multiple equilibrium path. Policy, such as a green subsidy, needs to exceed a critical threshold level to achieve green transition, and even larger to increase welfare. We analyse the feasibility, speed, and cost of transition showing how they depend on the strength of peer effects, the value of emissions avoided, and on policy employed. 
Pigouvian policies internalising the externalities associated with climate damage and with peer effects may not be sufficient to lead to a green transition; even if they are, they may not yield net benefits given the costs of transition.Outcomes seem relatively insensitive to the exact form of policy measures, providing they exceed the critical threshold level.