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Game theory has revolutionised our understanding of industrial organisation and the traditional theory of the firm. Despite these advances, industrial economists have tended to rely on a restricted set of tools from game theory, focusing on static and repeated games to analyse firm structure and behaviour. Luca Lambertini, a leading expert on the application of differential game theory to economics, argues that many dynamic phenomena in industrial organisation (such as monopoly, oligopoly, advertising, R&D races) can be better understood and analysed through the use of differential games. After illustrating the basic elements of the theory, Lambertini guides the reader through the main models, spanning from optimal control problems describing the behaviour of a monopolist through to oligopoly games in which firms' strategies include prices, quantities and investments. This approach will be of great value to students and researchers in economics and those interested in advanced applications of game theory.

1. The theory of managerial firms : setting the stage -- 2. Strategic delegation in oligopoly -- 3. Mixed oligopolies -- 4. Collusive behaviour and horizontal mergers -- 5. Divisionalization and vertical relations -- 6. Innovation and technical progress -- 7. Endogenous product differentiation -- 8. Trade and the environment -- 9. Strategic delegation in differential games.

1. The origins : a bit of history -- 2. What is a game? -- 3. Solving a game -- 4. Understanding economics -- 5. Repeated games and collusive behaviour -- 6. Understanding politics -- 7. Wargames -- 8. Trade, security and hegemony -- 9. The role of information -- 10. Bargaining and cooperation.

"Individuals, firms, governments and nations behave strategically, for good and bad. Over the last few decades, game theory has been constructed and progressively refined to become the major tool used by social scientists to understand, predict and regulate strategic interaction among agents who often have conflicting interests. In the surprisingly anodyne jargon of the theory, they 'play games'. This book offers an introduction to the basic tools of game theory and an overview of a number of applications to real-world cases, covering the areas of economics, politics and international relations. Each chapter is accompanied by some suggestions about further reading"--Provided by publisher

"The interplay between firms' internal organization and market behaviour is a long standing issue in industrial economics. This book examines firms' objectives in the comparatively new perspective shaped by globalization. The positive and normative aspects of theoretical analysis are developed and richly complemented by empirical studies"--Provided by publisher

A well established dynamic model describing the impact of oligopolistic interaction on a renewable resource is revisited here to illustrate its dual interpretation as a waste removal differential game. The regulatory implications are illustrated by assuming that the public agency may control market price and possibly also access to the commons. Two different formulations of the managerial or CSR objective are envisaged, based on a combination of profits and either output or the individual share of the waste stock. It is shown that if the representative firm's objective includes the residual waste stock, there exists a unique regulated price driving to zero the steady state stock itself. Hence, the present analysis delivers some useful indications concerning an appropriate definition of the CSR objective firms should adopt.

The optimal design of two-part tariffs is investigated in a dynamic model where two firms belonging to the same supply chain invest in R&D activities to increase the quality of the final product. It is shown that the replication of the vertically integrated monopolist's performance can be attained using a TPT in which the fee is a linear function of either the upstream R&D effort or product quality itself. The possibility of relying on R&D figures appearing in the upstream firm's balance sheet is desirable as quality enhancement might not be observable or verifiable.

I propose a differential oligopoly game of resource extraction under (quasi-static) open-loop and nonlinear feedback strategies, where firms are managerial and two alternative types of delegation contract are considered. Under open-loop information, delegation expands the residual steady state resource stock. Conversely, under nonlinear feedback information the outcome depends on the structure of managerial incentives. If sales are used, once again delegation favours resource preservation. On the contrary, if market shares are included in the delegation contract, this combines with an underlying voracity effect in shrinking the steady state volume of the resource.

This paper offers an overview of the literature discussing oligopoly games in which polluti ng emissions are generated by the supply of goods requiring a natural resource as an input. An analytical summary of the main features of the interplay between pollution and resource extraction is then given using a differential game based on the Cournot oligopoly model, in which (i) the bearings on resource preservation of Pigouvian tax rate tailored on emissions are singled out and (ii) the issue of the optimal number of firms in the commons is also addressed.