A Theory of Efficient Cooperation And Competition

by Lester G. Telser

• ISBN13: 9780521022200
• ISBN10: 0521022207
• Format: Paperback
• Copyright: 2005-11-10
• Publisher: Cambridge University Press

Summary

This book looks at competition in a new way. It attacks the notion that competition always leads to good results and that more competition is better. It also attacks the notion that cooperation is always harmful. An efficient economic equilibrium requires an optimal combination of both cooperation and rivalry. Telser first examines the genesis of certain late nineteenth-century laws that affected competition in the United States. Going on to give new theoretical insights into cooperation and rivalry, he shows when unrestricted competition can lead to an efficient equilibrium, as well as when restrictions on competition can provide for the same. The tensions between these two forces are especially pertinent to the study of innovation--the more costly it is to protect the property rights of ideas, the greater is the reliance on secrecy, and hence, the more likely is the wasteful duplication of results.

Table of Contents

List of tables	ix
Preface	xi
Prologue	1	(9)
Introduction	1	(3)
Guide for the reader	4	(6)
Perceptions and reality: the genesis of the Sherman act	10	(38)
Introduction	10	(3)
Reality: the legacy from the past	13	(5)
Perceptions about the economy after the end of the Civil War	18	(7)
State of the U.S. economy during the last third of the nineteenth century	25	(23)
Competition, cooperation, and efficiency	48	(26)
Introduction	48	(1)
Competition in pure exchange	49	(5)
Description of the example	54	(8)
Analysis of competition for the example	62	(11)
Conclusion	73	(1)
Stable coalitions	74	(70)
Part 1 Stable coalitions whose returns are convex functions	74	(27)
Introduction	74	(4)
Definitions and basic properties	78	(5)
Extreme coalitions	83	(4)
Properties of the imputations for a superadditive, strictly convex function	87	(7)
Totally kind functions	94	(5)
Application to semiprivate goods	99	(2)
Part 2 Stable coalitions whose returns are concave functions	101	(21)
Introduction	101	(7)
Some facts about concave characteristic functions	108	(2)
Status of the core for concave f	110	(7)
Status of the core for plants of optimal size	117	(5)
Part 3 Stable coalitions for private and semiprivate goods	122	(22)
Introduction	122	(2)
The principal result	124	(5)
The invisible-hand theorem	129	(6)
Relations between the neoclassical and core theories	135	(9)
Equilibrium with decreasing average cost: an application of the theory of the core illustrated by production and exchange among spatially separated markets	144	(43)
Introduction	144	(2)
Description of the economic model	146	(8)
The linear programming problem	154	(3)
The optimal assignment	157	(4)
Status of the core	161	(5)
An algorithm for finding the optimal assignment	166	(3)
Some numerical examples for illustrating the theoretical results	169	(7)
Prices paid and prices received	176	(5)
Conclusions	181	(1)
Appendix: multiproduct plants	182	(5)
A theory of self-enforcing agreements	187	(33)
Introduction	187	(6)
Long-term versus short-term contracts	193	(6)
A principal-agent problem: Prizzi's honor	199	(6)
Research and development: a free-loader problem	205	(5)
The Prisoners' Dilemma	210	(8)
Summary	218	(2)
Some new results on duopoly applied to theories of Cournot, Bertrand, and Edgeworth	220	(22)
Introduction	220	(1)
Assumptions of the model	221	(3)
Noncooperative equilibria under Assumption 2, Bertrand--Edgeworth	224	(7)
Noncooperative equilibria under Assumption 1, Cournot	231	(6)
Additional tests of the rival theories	237	(5)
Rivalry by means of innovation	242	(54)
Part 1 Some empirical results	242	(20)
Introduction	242	(3)
Innovation when research results are private	245	(5)
Some empirical results relating merger intensities to growth rates, 1895--1930, and merger rates to measures of innovation, 1951--9	250	(4)
Empirical evidence from cross sections of manufacturing industries over time, 1947--72	254	(8)
Part 2 A theory of innovation and its effects	262	(34)
Introduction	262	(2)
Optimal sequential research from a known distribution	264	(6)
N Simultaneous independent research programs	270	(7)
The unified theory	277	(8)
Predictions	285	(2)
Technical appendix	287	(9)
References	296	(5)
Index	301