International Society of Dynamic Games

Dynamic Games and Applications Seminar

Market power: A powerful motive for mergers in extractive industries

Apr 17, 2025   11:00 AM — 12:00 PM (Montreal time)

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We examine firms’ incentives to acquire rivals in an effort to monopolize an exhaustible resource sector, and the equilibrium industry structure that emerges when the acquisition price is endogenous. Given a market structure, firrms compete in quantities: each entity chooses its extraction policy, i.e. a Markovian strategy that allows extraction rate to depend on the vector of stocks. When the firrms’ stocks are sufficiently small, in contrast to the static Cournot case, monopolization becomes a profitable strategy. The firm with the largest stock is the least likely to monopolize the industry. For a given acquirer, the gains from monopolization are only positive if the targets’ stocks are neither too large nor too small. The lower the demand elasticity, the less likely that either extreme case, i.e. monopoly or the unmerged equilibrium, occurs.

(with Hassan Benchekroun and Ying Tung Chan).

Dynamic Games and Applications Seminar

Assessing the impact of carbon quota allocation on emission reduction and advertising efforts in supply chain

Apr 10, 2025   11:00 AM — 12:00 PM (Montreal time)

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We analyze carbon quota allocation (grandfathering vs. benchmarking) in cap-and-trade systems on supply chain dynamics. Differential game models reveal benchmarking amplifies emission reduction and advertising efforts, accelerating product goodwill growth. Rising permit prices incentivize decarbonization but unevenly affect profits. Per-unit benchmarking fosters collaboration, benefiting all members, whereas grandfathering traps less eco-friendly firms in low-investment cycles.

Dynamic Games and Applications Seminar

Investment in Abatement Capacity when Consumers Value the Environmental Performance of the Supply Chain

Mar 20, 2025   11:00 AM — 12:00 PM (Montreal time)

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In this paper, we examine abatement investment and pricing in a supply chain where consumers value environmental performance. The product’s green reputation depends on its pollution rate relative to a declining industry standard. The manufacturer manages abatement investment, with optional cost-sharing by the retailer. Cost-sharing achieves a Pareto-optimal outcome but may increase total emissions by boosting demand. Faster declines in the industry standard reduce abatement investment. Firms with lower initial green reputation – “brown firms” – struggle to catch up, while firms with higher initial states benefit from a cycle of increased investment, enhanced abatement capacity, reduced emissions, and greater goodwill gains.

(With Elena Parilina and Georges Zaccour.)