International Society of Dynamic Games

Dynamic Games and Applications Seminar

Strategic Pricing and Investment in Environmental Quality by an Incumbent Facing a Greenwasher Entrant

Apr 20, 2023   11:00 AM — 12:00 PM (Montreal time)

Webinar link.

In this study, we analyze the effect of greenwashing on firms’ strategies and outcomes and consumers. We consider a two-stage game where a monopolist makes pricing and environmental quality investment in the first stage and competes with an entrant in the second stage. The incumbent is a green firm and does not overrate the environmental quality of its product, while the entrant may be tempted by greenwashing. We assume that only inexperienced consumers, that is, consumers who did not purchase the product in the first period, can be lured by greenwashing. Consequently, our model captures two important dynamic features, namely, the change in the competitive structure, and the presence of a “learning” effect in the market. We investigate the conditions that make greenwashing profitable for the entrant, how the incumbent responds to greenwashing, and the impact of greenwashing on the environment and customers.

(with Arka Mukherjee and Georges Zaccour)

Dynamic Games and Applications Seminar

Partial Centralization in a Durable-Good Supply Chain

Apr 6, 2023   11:00 AM — 12:00 PM (Montreal Summer Time)

Webinar link.

Most supply chain research assumes complete centralization or complete decentralization but omits the commonly adopted structure of partial centralization. With partial centralization, a firm owns a portion, but not all, of its partner. In this paper, we analyze partial centralization in a supply chain where a durable-good manufacturer owns part of its downstream retailer. We start with a two-period model and derive analytical equilibrium outcomes of the supply chain. Our analysis reveals that first, partial centralization can become the equilibrium supply chain structure. Second, the manufacturer’s equilibrium ownership level in the retailer decreases in product durability and decision horizon length.

Dynamic Games and Applications Seminar

How Do Coalitions Break Down? An Alternative View

Mar 30, 2023   11:00 AM — 12:00 PM (Montreal Summer Time)

Webinar link.

We propose an alternative dynamic theory of coalition breakdown. Motivated by recent coalition splitting events, we assume that: i) the payoff sharing rule within coalitions is not necessarily set according to any optimality and/or stability criterion, and, ii) players initially behave as if the coalition will last for ever. If the sharing rule is non-negotiable or if renegotiation is very costly, compliance to these rules may become unbearable for a given member as time passes because the rule, being too rigid, would make exit preferable. We examine this endogenous exit problem in the case of time-invariant sharing rules. Assuming a Nash non-cooperative game after (potential) splitting where players play Markovian, we characterize the solutions of the endogenous exit problem in a linear-quadratic frame with endogenous splitting time. We find that splitting countries are precisely those which use to benefit the most from the coalition. When initial pollution is high, all shares should be low enough and none of the players should detain a payoff share larger than 1/2. If initial pollution is small, we provide with an explicit interval for the sharing rule values preventing the collapse of the coalition.

(with Raouf Boucekkine, Carmen Camacho, Weihua Ruan)