Volume 25, Issue 2

The paper presents a bargaining model that compares two forms of licensing of Standard Essential Patents (SEPs) in terms of their ability to deliver Fair, Reasonable and Non-Discriminatory (FRAND) royalties. The first is a profit-based or ad valorem contract signed ex-ante, before the product market entry of the implementer. The second is a lump sum contract signed ex-post, after implementers’ profits have been realized. Both contracts are realistic, i.e. compatible with the typical timing of standardization activities. We find that the ex-ante contract dominates the ex-post one in many but not all situations. It does when the imbalance in bargaining power between the parties is not too strong, independently of how the latter is distributed. In more extreme situations of bargaining power imbalance (typical hold-up and hold-out situations), ex-ante contracts are again better when the level of litigation costs relative to profits is very high or very low. However, for intermediate levels of litigation costs relative to profits, the threat of litigation may be useful to set royalties that are closer to FRAND. This finding is relevant in light of current regulatory initiatives over-emphasizing ex-ante licensing, like the European SEP Regulation.

This research analyzes a firm’s timing of bringing a new product to the market, based on a product-innovation timing game in which the quality of a new product increases over time. We explore the equilibrium outcomes when both firms can precommit to their timing of market entry (the so-called precommitment game), when they cannot credibly precommit to their timing of market entry (the so-called preemption game), and when only one firm can precommit to its timing of market entry (the so-called mixed precommitment game). Sequential entry is the unique equilibrium outcome in all three games. We finally discuss two extended timing games with endogenous commitment choices. The equilibrium involves a precommitment subgame in the endogenous precommitment game with observable delay, while mixed precommitment subgames appear to be the equilibria in undominated strategies in the endogenous precommitment game with action commitment.

Several studies have shown that minimum wage policies have the potential to mitigate income inequality. Both EU-level and national policies have sparked discussions regarding the adequacy of minimum wages and their impact on income inequality at the country level. However, the impact on EU-level income inequality of coordinated minimum wage policies remain uncertain. While upward convergence in minimum-wage settings across countries may reduce inequality within countries, it could also exacerbate disparities between them. This study assesses the EU-wide impact of minimum wage policies beyond national effects. Using a microsimulation model and assuming negligible employment effects, our results suggest that implementing a hypothetical minimum wage set at 60 % of the national median wage in EU countries would result in a limited yet significant reduction in EU-level income inequality (by 0.6 % in 2019, as measured by the Gini index). This reduction stems from a relative decrease in both within-country and between-country inequality, although the absolute reduction in Gini points is more pronounced for within-country inequality. Notably, the percentage reduction in inequality is broadly similar for both market and disposable incomes. However, the withdrawal of social benefits due to higher minimum wages appears to offset part of this reduction in market inequality.

Regulatory contestability posits that the threat of economic regulation disciplines pricing even in the absence of explicit regulatory mechanisms (e.g., cost-of-service regulation or price cap regulation). Formal modeling and numerical simulations reveal how regulatory contestability interacts with cost-reducing effort to limit the pass-through of costs. This may suggest that under certain conditions regulatory contestability can substitute for explicit regulatory mechanisms and potentially reduce the cost of regulation.

While United Nations Security Council sanctioned peacekeeping minimizes free riding because a universal funding formula is applied to all UN members, there are political constraints on both how much money is available, and which missions the Council will approve. We argue that resulting from these constraints five other international peacekeeping organizational arrangements have come into existence – those through alliances, bespoke coalitions, hybrid between different organizations, location specific and UN Trust Funds. We examine the economic characteristics that frame the requirements for these peacekeeping organizations to come into operation.

We use a large dataset of Russian public procurement auctions for standard gasoline over the period 2011–2013, to investigate how buyers set the reserve price – i.e. the buyer’s announced maximum willingness to pay for the good awarded. We provide empirical evidence that repeated prior contracts between a buyer and a supplier affect the reserve price set by this buyer in future auctions where the same supplier takes part and wins. Specifically, we find that in these auctions the reserve price, the level of competition, and the winning unit price are lower than in the average auction in the dataset. We conjecture that, in setting the reserve price for a new auction, public buyers exploit information gained about the winners of previous auctions. This intuition is supported by empirically studying the reserve price in a dynamic framework, which allows buyers to take into account information from previous procurement transactions with given suppliers. Finally, we show that our empirical results are in line with a simple theoretical setting in which the buyer collects information about one supplier’s costs and exploits this in setting the reserve price in future auctions.

We examine the extent of grade inflation in courses taken during high school and how such differences vary across student and school characteristics. Using administrative data, we assess grade inflation in Portuguese high schools over a decade. We propose a relative measure of grade inflation, comparing students’ high school grades to their national exam ranks. Examining various school types, we find that private schools tend to inflate grades more than their public school peers, particularly at the top of the ability distribution. A regional disaggregation indicates that the northern districts exhibit higher probabilities of grade inflation.

This paper examines if (i) the estimated labor supply elasticity is biased due to changes in the bargaining positions within a household in Korea and (ii) the problem, if detected, can be mitigated by using the distribution of different consumption bundles as a proxy (Bredemeier, Christian, Jan Gravert, and Falko Juessen. 2023. “Accounting for Limited Commitment Between Spouses when Estimating Labor-Supply Elasticities.” Review of Economic Dynamics 51: 547–78). Using KLIPS data from 2008 to 2022, we estimate the Frisch elasticity for married male workers to be around 0.44 and the bias is corrected mostly by controlling for total consumption, not by the distribution of consumption bundles. Similarly, estimates for married female workers did not exhibit significant bias. We suggest possible explanations on why our finding is different from the previous finding using US data.

The aim of this paper is to investigate whether the existence of a rival firm can encourage another firm to proliferate its brand. To do so, we compare the incentive to invest in brand proliferation in monopoly and the one in duopoly. We find that in duopoly there are asymmetric equilibria where only one firm proliferates its brand but the other does not even if they are identical. In that case, the incentive to invest in brand proliferation is stronger in duopoly than in monopoly if two firms provide closer substitutes. Further we also show that the multi-product firm increases its profit by providing closer substitutes. It implies that an incumbent can deter entry with commitment by proliferating its brand. Such a result is in contrast with Judd [RAND J. Econ 16 (1985) 153].

We examine the impacts of a marine environmental disaster on parents’ educational investments in the context of Vietnam. Previous research finds that the disaster caused a labor shock in the fishing industry, a primary source of income for workers in the area studied. Using administrative data and a difference-in-differences framework, we find that parents in affected provinces decreased educational investments by 29 % during the four years after the disaster. In households with male and female children of compulsory schooling age, we estimate that affected families spent approximately 5–6 % less on educational expenditures for girls than boys in affected provinces after the disaster.