This study explores whether market competition between firms owned and run by managers favors overconfident managers. We study this question in a linear duopoly setting with differentiated products. The main result is that when there is complete information about the competitor’s type, evolutionary market selection forces will always favor a positive degree of managerial overconfidence. This re...

We present a theory of entrepreneurial entry and exit decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: each entrant in a large market is more efficient than any entrepreneur in a smaller market. The result obtains since competition is endogenously more intense in larger markets. The sor...

A firm with a product that competes in a market that has a complementary product (in a different market) must consider the interdependence between the complementary products as well as the competition within markets. If the firm participates in both markets, the balancing act becomes even more challenging. This paper provides insights about strategies in this latter setting. When should the fir...

This paper proposes a model for dynamic pricing that combines knowledge of production capacity and existing commitments, reasoning about uncertainty and learning of market conditions in an attempt to optimise expected profits. In particular, the changing market conditions are represented as a set of probabilities over the success rate of product prices. The dynamic pricing model is integrated i...

Private equity firms are drivers of the ongoing international restructuring process. Extensive use of leverage gives private equity firms a tax advantage in the market for corporate control. We show that with limited deductibility of acquisition costs, these tax advantages will affect the efficiency of the market for corporate control: a private equity firm can outbid more efficient incumbent b...

This paper develops a real options model to study the interaction between industry structure and takeover activity. In an asymmetric industry equilibrium, firms have an endogenous incentive to merge when restructuring decisions are motivated by operating and strategic benefits. The model predicts that (i) the likelihood of restructuring activities is greater in more concentrated industries or i...

0167-6245/$ see front matter 2009 Elsevier B.V doi:10.1016/j.infoecopol.2009.10.002 * Corresponding author. E-mail addresses: [email protected] (A [email protected] (C. Forman), anand_nandkum kumar), [email protected] (R. Telang). We empirically estimate the effect of competition on vendor patching of software defects by exploiting variation in number of vendors that share a common fl...

The overall gender wage gap fell from .31 to .15 between 1986 and 2003 following the transition to a free market in Hungary. During the same time period, firms faced increased competition from both new domestic and foreign firms due to the rapid liberalization measures implemented by the government. Becker’s (1957) model of employer taste discrimination implies that employers that discriminate ...

Product Market Competition and Lobbying Coordination in the U.S. Mobile Telecommunications Industry* by Astrid Jung and Tomaso Duso This paper empirically investigates market behavior and firms’ lobbying in a unified structural setup. In a sequential game, where firms lobby for regulation before they compete in the product market, we derive a testable measure of lobbying coordination. Applying ...

In all the finance innovations, warrant and its finance relative product will be the new direction. Warrant has the lower risk compared with others, and there is a large quantity of demand for it. In our inland security market, the condition for developing other finance product, such as stock futures and stock option is not mature, so it is a smart choice to choose warrant at first. Warrant is ...