Luca Gori

• Professor (Full) at University of Pisa

This research studies the endogenous choice of simultaneous (Cournot) or sequential (Stackelberg) moves in a quantity-setting duopoly in which firms have social concerns and convex technologies. A parsimonious non-cooperative endogenous timing game (ETG) is developed to determine the sub-game perfect Nash equilibrium (SPNE). The article shows that...

Common wisdom suggests that noncontrolling, interlocking crossholdings is always profitable in a Cournot duopoly model. Therefore, the maximal profit is obtained by a reciprocal share of ownership of about 50%, which allows for the monopoly profit. By contrast, we analyze a network industry and show that crossholdings can be unprofitable under netw...

Purpose – This article compares the environmental and welfare effects of three policies in a polluting managerial duopoly with homogeneous goods: an emissions tax, an abatement subsidy and a policy mix of those two instruments. Design/methodology/approach – The article analyzes an emissions reduction policy selection in a managerial duopoly using a...

Using a non-cooperative two-stage game, this paper studies the effects of the variable costs of achieving compatibility on the strategic choice of producing compatible/incompatible goods in Cournot and Bertrand duopolistic network industries. A broad variety of sub-game perfect Nash equilibria can emerge depending on the interaction between the coo...

Considering a Cournot duopoly with network goods, this paper shows some unconventional effects due to passive unilateral cross-ownership (i.e., one firm holds non-controlling shares in the rival firm): the industry profitability of the network duopoly can be reduced, or social welfare increased, depending on the degree of compatibility between good...

The present work aims to study the problem of individual voluntary anonymous contributions to the financing of public goods in a dynamic setting. To do this, the article departs from a textbook model à la Naimzada and Tramontana (2010) augmented with public goods. The article studies how bounded rationality and dependence on agents’ past decisions...

In a third-country market model in which two export countries adopt environmental policies (taxes and subsidies), this article analyses how an abatement (“green”) subsidy can become a potential strategic trade policy tool. When governments set the optimal policy considering their local environmental damages, a rich set of equilibria arises. In cont...

In a Cournot duopoly with indirect tax evasion, this paper counter-intuitively shows that, in the presence of positive competitive wages, a higher indirect taxation may increase expected profits. This result is likely to occur if the market size (or alternatively, if the cost pressure exerted by wages) is adequately large and the detection probabil...

In a polluting Cournot duopoly with homogeneous goods, this work compares the environmental, public finance and welfare impacts of three policies: an emissions tax, an abatement subsidy, and a policy mix. A subsidy, alone or coupled with a tax, always increases abatement; however, taxation disincentivises production, leading to decreased environmen...

This article considers a quantity‐setting duopoly (Cournot rivalry) in which firms adopt an abatement technology as a device to improve the quality of products. Consumer preferences capture vertical product differentiation (quality) towards “green” products. This introduces a trade‐off on the production side, as firms that do not abate, in turn, do...

The main aim of the present research is to consider a monetary union’s economy consisting of N countries, N fiscal authorities (one for each country) and a single monetary authority. The fiscal authorities want to stabilise output and public debt through the primary government balance, and they can exhibit heterogeneous preferences about the trade-...

This work aims to investigate the effects of co-determination in a game-theoretic setting by considering network externalities in consumption. The received theoretical literature, so far focused only on standard (non-network) industries, showed that co-determination might emerge as the sub-game perfect Nash equilibrium (SPNE) of a non-cooperative C...

Making use of an appropriate game-theoretic approach, this article develops a two-stage game in a Cournot duopolistic network industries, in which firms strategically choose whether to produce compatible goods. Quality differentiation significantly affects the sub-game perfect Nash equilibrium (SPNE): (i) the network effect acts differently between...

This article considers an N-firm oligopoly with abating and non-abating firms and analyses a dynamic setting in which the environmental regulator sets the tax rate to incentivise firms to undertake emission-reduction actions according to different hypotheses (fixed rule and optimal rule). The behaviour of the public authority sharply affects the fi...

This research introduces sales delegation in a product innovation game by considering Cournot and Bertrand duopolies. The article first revisits the existing results with profit‐maximising firms, showing that a prisoner's dilemma with undifferentiated products cannot occur in a Bertrand rivalry setting. Then, by considering the separation between o...

This research revisits the pioneering work by Katz and Shapiro (Am Econom Rev 75:424–440, 1985) with network (consumption) externalities in a twofold way: first, it considers Corporate Socially Responsible (CSR), instead of profit-maximising, firms; second, it uses a game-theoretic approach and analyses the commitment decision game in which firms f...

The R&D literature framed in a strategic context shows two unpleasant outcomes for the public goods nature of knowledge: 1) the private R&D activity results in underinvestment (with no information leakage – no spillovers) or over-investment (with information leakage – positive spillovers) compared to the social optimum because of appropriability, a...

This note represents a corrigendum to Buccella et al. (Citation2022), Network externalities, product compatibility and process innovation, Economics of Innovation and New Technology, DOI: 10.1080/10438599.2022.2095513. It provides a correction to a typo in the utility function of the published version of the article. Results of the published versio...

This article considers a product’s compatibility as a strategic variable in a Cournot duopoly with network consumption externalities. It develops a non-cooperative compatibility decision game (CDG) in which firms choose whether to let products be (in)compatible. With costless compatibility, the unique (Pareto-efficient) sub-game perfect Nash equili...

This article presents a three-stage non-cooperative disclosure decision game (DDG), in which R&Dinvesting firms choose whether to disclose R&D-related information to the rival in a Cournot-like environment. Though firms have no (private) incentive to disclose information unilaterally on their cost-reducing R&D activity to prevent a rival from engag...

Abstract In a Cournot duopoly with indirect taxes evasion, this paper counter-intuitively shows that, in the presence of unions, a higher indirect taxation may increase profits because taxes reduce wage claims. This result is likely to occur if the market size is adequately large and the detection probability is not too high. Moreover, unionisation...

Recently, in their 2019 paper, Poyago-Theotoky and Yong consider a managerial Cournot duopoly with pollution externalities and emission taxes and propose an explicit environmental incentive in a managerial compensation contract. The authors compare several exogenous equilibria emerging in the symmetric sub-games in which the owner offers either the...

Making use of an appropriate game-theoretic approach, this article develops a two-stage game in a Cournot duopoly in network industries, in which firms strategically choose whether to produce compatible goods. Quality differentiation significantly affects the sub-game perfect Nash equilibrium (SPNE) of the game: (i) the network effect acts differen...

The degree of compatibility is a crucial feature of network goods. This article considers the degree of product compatibility as a strategic variable in a Cournot duopoly with network consumption externalities. For doing this, it develops a non-cooperative “compatibility decision game” (CDG) in which choosing whether letting products being (in)comp...

Abstract: In a third-country model in which export countries adopt environmental policies, this note analyses how abatement ("green") subsidy can become a potential strategic trade policy tool. When governments set the optimal policy tool considering their local environmental damages, a rich set of equilibria arise. In contrast to the standard resu...

This work revisits the R&D duopoly à la d’Aspremont and Jacquemin (1988, 1990) (AJ henceforth) considering an economy with firms engaged in corporate social responsibility (CSR). In the traditional AJ setting without spill-over effects, firms invest in R&D as a sub-game perfect Nash equilibrium (SPNE) strategy, but they are cast into a prisoner’s d...

The COVID-19 pandemic is still ravaging the planet, but its (short-, medium-, and long-term) diverse effects on health, economy, and society are far from being understood. This article investigates the potential impact of a deadly epidemic and its main nonpharmaceutical control interventions (social distancing vs. testing-tracing-isolation, TTI) on...

This article extends the cost-reducing R&D model with spillovers by d’Aspremont and Jacquemin (1988. “Cooperative and Noncooperative R&D in Duopoly with Spillovers.” The American Economic Review 78: 1133–7, 1990. “Cooperative and Noncooperative R&D in Duopoly with Spillovers:Erratum. ”The American Economic Review 80: 641–2) to allow quantity-settin...

This article examines how determining an optimal environmental tax in a Cournot duopoly with unionized labour markets and managerial firms departing from the strict profit-maximization. It is shown that firmspecific monopoly unions that set wages (1) reduce both the environmental tax and environmental damage and (2) counterintuitively, increase fir...

This research combines two strands of economic literature in a dynamic setting: endogenous preferences (on the consumer side) and strategic competitive markets (on the production side). This is done by considering a model in which aggregate demand depends on past consumption (Benhabib and Day, 1981; Gaertner and Jungeilges, 1988), whereas firms nai...

This article augments d’Aspremont and Jacquemin’s [1988. “Cooperative and Noncooperative R&D in Duopoly with Spillovers.” American Economic Review 78: 1133–1137; 1990. “Cooperative and Noncooperative R&D in Duopoly with Spillovers: Erratum.” American Economic Review 80: 641–642] cost-reducing R&D duopoly by introducing network externalities and pro...

This work revisits the R&D model à la D’Aspremont –Jacquemin (1988) (AJ) in a context with socially responsible firms. In the traditional model firms invest but, in equilibrium, they are cast into a prisoner’s dilemma. Socially responsible firms also invest in equilibrium. However, provided that firms consider sufficiently high consumer welfare, to...

This paper investigates the effects of a public uniform R&D subsidy policy in a downstream duopoly market in which a non-integrated firm, which faces a lower marginal cost, outsources inputs from its vertically integrated rival. The findings show that, in this market structure, such a policy has relevant effects largely differentiated between downs...

This research considers the problem of a price-discriminating monopolist aiming at choosing output and investing in product differentiation to foster consumers perceiving products as being heterogeneous in different market segments. It then introduces bounded rationality and concentrates on the dynamic analysis showing the existence of several dyna...

Infectious diseases have been a major determinant of human mortality in history and the key regulator of population size, including the first epoch of the Industrial Revolution (until the 1950s) in Western countries and still now in developing countries, especially in Sub-Saharan Africa. In recent times, a new vein of economic research dealing with...

This article develops a non-cooperative game with managerial quantity-setting firms in which owners choose whether to delegate output and abatement decisions to managers through a contract based on emissions (conventionally denoted as ‘green’ delegation, GD) instead of sales (sales delegation, SD), and the government levies an emissions tax to ince...

This article extends the classical d’Aspremont and Jacquemin’s (1988, 1990) cost-reducing R&D model with spill-overs to allow quantity-setting firms (Cournot rivalry) to play the non-cooperative R&D investment decision game with horizontal product differentiation. Unlike Bacchiega et al. (2010), who identify a parametric region – defined by the ext...

This research introduces endogenous codetermination in a Cournot duopoly. Unlike the received literature (Kraft, 1998), this work assumes that firms bargain with their own union bargaining units under codetermination if and only if they can choose an ad hoc bargaining effort by maximising profits (three‐stage non‐cooperative game). There are remark...

This research analyses firms' strategic choice of adopting an abatement technology in an environment with pollution externalities when the government levies an emission tax to incentivise firms to undertake emission-reducing actions. A set of different Nash equilibria – ranging from dirty to green production – arises in both quantity-setting and pr...

This research develops a continuous-time optimal growth model that accounts for population dynamics resembling the historical pattern of the demographic transition. The Ramsey model then becomes able to generate multiple determinate or indeterminate stationary equilibria and explain the process of the transition from a state with high fertility and...

According to the conventional theory of the demographic transition, mortality decline has represented the major trigger of fertility decline and sustained economic development. In Sub-Saharan Africa (SSA), the HIV/AIDS epidemic has had a devastating impact on mortality, dramatically reversing the long-term positive trend in life expectancies in hig...

We provide an overview to the special issue entitled New Tools for Global Analysis of Economic Dynamics by detailing the main aim of each contribution being part of it.

Despite the increasing rate of diffusion of effective therapies, the battle against HIV/AIDS in Sub-Saharan Africa (SSA) is far from being over. Three main challenges are that the epidemics might paralyse or reverse the fertility transition, the expansion of the resources needed to finance the fight against HIV, and the emerging resistance to anti-...

This article develops a theory to explain economic development in a neoclassical growth model. The (co)existence of endogenous labour supply and endogenous lifetime (affected by public and private expenditures on health) allows to effectively observe multiple development scenarios under the assumption of gross substitutability between consumption a...

Maladaptation and global indeterminacy – Erratum - Angelo Antoci, Luca Gori, Mauro Sodini, Elisa Ticci

This article analyzes a general equilibrium growth model with overlapping generations and (production-induced) environmental degradation. Individuals react to environmental damages through mitigation or adaptation. In the former case, they reduce production and its environmental impact. In the latter, they do not tackle the causes of the problem bu...

A central policy issue in the battle against HIV in sub-Saharan Africa (SSA) is whether and when high-prevalence countries might become autonomous in designing and implementing their own intervention policies against the disease. The aim of this research is twofold. First, it develops a framework for explaining economic development in a general equ...

The aim of this research is to build on a theory for explaining economic development in a (neoclassical) growth model with endogenous fertility. The economy is inhabited by overlapping generations of rational and identical individuals and identical competitive firms producing with a constant-returns-to-scale technology and no externalities. From a...

This research develops a tractable two‐stage non‐cooperative game with complete information describing the behaviour of price‐setting firms that must choose to be profit maximisers or bargainers under codetermination in a network industry with horizontal product differentiation. The existing theoretical literature has already shown that codetermina...

The aim of this work is to analyse the interplay between economic growth and environmental quality. Specifically, the article considers an economic growth model with optimising agents à la Ramsey where production negatively affects the environment. The novelty of this work is to assume that such a negative impact does occur with a certain time lag...

This research aims at studying a general equilibrium closed economy with overlapping generations and inherited tastes (aspirations), as in de la Croix (Econ Lett 53(1):89–96, 1996). It shows that the interaction between the intensity of aspirations and the elasticity of substitution of effective consumption affects the qualitative and quantitative...

This research revisits the theoretical literature on codetermination in differentiated Cournot duopoly markets. Although codetermination is widely adopted in some north European countries, the theoretical analysis is restricted to a few number of works. The literature is led by Kraft (1998), who shows that codetermination emerges as a market outcom...

This research develops an augmented Solow model with population dynamics and time delays. The model produces either a single stationary state or multiple stationary states (able to characterise different development regimes). The existence of time delays may cause persistent fluctuations in both economic and demographic variables. In addition, the...

This article tackles the issue of local and global dynamics in a nonlinear duopoly with quantity setting (managerial) firms and horizontal product differentiation. It studies how the dynamics of a two-dimensional discrete time map evolves by focusing on changes either in the degree of product differentiation or the managerial power in the market sh...

This article revisits the classical work of Puu (Chaos Soliton Fract 1(6):573–581, 1991) on duopoly dynamics by gathering two distinct aspects of the functioning of markets: production of goods requires time and is subject to some gestation lags, but trading takes place continuously. Dynamics are characterized by a two-dimensional system of delay d...

This article represents an attempt to characterise the dynamics of a nonlinear duopoly with price competition and horizontal product differentiation by accounting for non-negativity constraints (on profits and the market demand). The model is set up by following the tradition led by Bischi et al. (1998), according to which players have limited info...

This article aims at studying a general equilibrium model with overlapping generations that incorporates inherited tastes (aspirations) and endogenous longevity. The existence of standard-of-living aspirations transmitted between two subsequent generations in a context where the individual state of health depends on public investments in health has...

The aim of this research is to analyse a Keynesian goods market closed economy by considering a continuous-time setup with fixed delays. The work compares dynamic results based on linear and nonlinear adjustment mechanisms through which the aggregate supply (production) reacts to a disequilibrium in the goods market and consumption depends on incom...

In contrast with the existing literature with aspirations and exogenous fertility, this article shows that endogenous fluctuations are prevented in a general equilibrium economy with overlapping generations, aspirations and endogenous fertility.

This chapter considers different modelling approaches to study nonlinear monopolies with a downward and concave demand function based on the model by Naimzada and Ricchiuti (Appl Math Comput 203:921?925, 2008). In particular, the article characterises the dynamics of continuous time models with delays related to several assumptions regarding the bo...

This article revisits the managerial delegation literature led by Vickers (1985), Fershtman and Judd (1987) and Sklivas (1987) by introducing a bargaining mechanism between owners and managers over managerial contracts. It shows that the degree of bargaining interacts with the extent of product differentiation in determining whether the sub-game pe...

In this article, we investigate the local and global dynamics of a nonlinear duopoly model with price-setting firms and managerial delegation contracts (relative profits). Our study aims at clarifying the effects of the interaction between the degree of product differentiation and the weight of manager's bonus on long-term outcomes in two different...

This article aims at analysing a two-sector economic growth model with discrete delays. The focus is on the dynamic properties of the emerging system. In particular, this study concentrates on the stability properties of the stationary solution, characterised by analytical results and geometrical techniques (stability crossing curves), and the cond...

This article challenges the results of the 'classical' managerial delegation literature, where it is assumed that the weight of the managerial bonus only depends on the owner's will to maximise his own profits. By considering sales (S) (resp. relative profit (RP)) contracts, the received literature has found that (S,S) (resp. (RP,RP)) is the unique...

We analyse the dynamics of an economy formed of overlapping generations of individuals whose well-being depends on leisure, consumption of a private good and a free access environmental resource. The production activity of the private good deteriorates the environmental resource. Individuals may defend themselves from environmental degradation by i...

We study a continuous time cobweb model with discrete time delays where heterogeneous producers behave as adapters in the market. Specifically, they partially adjust production (which is subject to some gestation lags) towards the profit-maximising quantity under static expectations. The dynamics of the economy is described by a two-dimensional sys...

This paper aims to study price dynamics in two different continuous time cobweb models with delays close to [Hommes, 1994]. In both cases, the stationary equilibrium may be not representative of the long-term dynamics of the model, since it is possible to observe endogenous and persistent fluctuations (supercritical Hopf bifurcations) even if a det...

This paper studies mathematical properties and dynamics of a duopoly with price competition and horizontal product differentiation by introducing quadratic production costs (decreasing returns to scale), thus extending the model with linear costs (constant returns to scale) of Fanti et al. [11]. The economy is described by a two-dimensional non-inv...

This paper tackles the issue of local and global analyses of a duopoly game with price competition and market share delegation. The dynamics of the economy is characterised by a differentiable two-dimensional discrete time system. The paper stresses the importance of complementarity between products as a source of synchronisation in the long term,...

This paper extends the classical repeated duopoly model with quantity-setting firms of Bischi et al. (1998) by assuming that production of goods is subject to some gestation lags but exchanges take place continuously in the market. The model is expressed in the form of differential equations with discrete delays. By using some recent mathematical t...

This paper aims at studying local and global dynamics in a nonlinear duopoly with quantity-setting firms and non-cooperative advertising investments that affect the degree of (horizontally) differentiated products. It concentrates on persuasive advertising in a model where each firm has limited information and uses a behavioural rule to set the qua...

This paper aims at studying a nonlinear dynamic duopoly model with price competition and horizontal product differentiation augmented with managerial firms, where managers behave according to market share delegation contracts. Ownership and management are then separate and managers are paid through adequate incentives in order to achieve a competit...

We develop a continuous time model with heterogeneous fundamentalists, imitators, and discrete time delays. We show that nonlinear dynamic phenomena, such as coexistence of attractors and local and global bifurcations, occur due to the existence of a time gap in the process of adjustment of market prices.

We develop a cobweb model with discrete time delays that characterise the length of production cycle. We assume a market comprised of homogeneous producers that operate as adapters by taking the (expected) profit-maximising quantity as a target to adjust production and consumers with a marginal willingness to pay captured by an isoelastic demand. T...

By assuming that grandparents take care of grandchildren, this paper aims at studying the effects of longevity on long-term economic growth in a model with overlapping generations and endogenous fertility. We show that an increase in longevity may: (i) reduce the long-term economic growth; (ii) increase the supply of labour, and (iii) cause fertili...

We examine the effects of child policies on both the transitional dynamics and long-run demo-economic outcomes in the conventional overlapping generations model of neoclassical growth extended with endogenous longevity and endogenous fertility. The government invests in public health (Chakraborty, 2004) and the individual survival probability at th...

This paper analyses the mathematical properties of an economic growth model with overlapping generations, endogenous labour supply, and multiplicative external habits. The dynamics of the economy is characterised by a two-dimensional map describing the time evolution of capital and labour supply. We show that if the relative importance of external...

We study the local stability properties of a duopoly game with price competition, different product quality and heterogeneous expectations. We show that the Nash equilibrium can loose stability through a flip bifurcation when the consumer’s type range increases. This result occurs irrespective of whether the high(low)-quality firm has either bounde...

Since increasing attention is paid to consider the macroeconomic effects of the increasing longevity, we study an overlapping-generations model with endogenous fertility to investigate the steady-state and dynamic effects (with static expectations) of two historical alternatives as a means of old-age insurance: voluntary intra-family transfers from...

This paper analyses the dynamics of a nonlinear Cournot duopoly with general isoelastic demand (quasi-linear preferences) and quantity-setting firms that have incomplete information about the market demand. Unlike existing papers, we propose a model where the price elasticity of demand is different from one. This causes interesting local and global...

We study the dynamics of a duopoly game à la Bertrand with horizontal product differentiation as proposed by Zhang et al. (2009) [35] by introducing opportune microeconomic foundations. The final model is described by a two-dimensional non-invertible discrete time dynamic system T. We show that synchronized dynamics occurs along the invariant diago...

We show that the introduction of unfunded public pensions in a Cobb-Douglas economy with overlapping generations and endogenous fertility may cause complex economic cycles when individuals are short-sighted. In particular, the risk of cyclical instability increases with both the individual degree of thriftiness and the relative weight of individual...

We analyse the steady-state equilibrium dynamics of the conventional overlapping generations economy à la Diamond (1965) with pay-as-you-go public pensions and second period of life divided between working and retirement time in a proportion dependent on the individual health status (a rather realistic assumption especially in the current world wit...

The present study considers a unionised (nonlinear) duopoly with two different labour market institutions, i.e. efficient bargaining (EB) and right to manage (RTM), to analyse product market stability under quantity competition with trade unions. We show that when the preference of unions towards wages is small, (i) the parametric stability region...

This paper analyses the dynamics of a duopoly with quantity-setting firms and different attitudes towards strategic uncertainty. By following the recent literature on decision making under uncertainty, where the Choquet expected utility theory is adopted to allow firms to plan their strategies, we investigate the effects of the interaction between...

The present study analyses the dynamics of a nonlinear Cournot duopoly with managerial delegation and bounded rational players. Problems concerning strategic delegation (based on relative performance evaluations) have recently received in depth attention in both the theoretical and empirical industrial economics literatures. In this paper, we take...

This study analyses how capital accumulation and fertility react to a child allowance policy in an overlapping generations model of growth with endogenous fertility. Multiple equilibria are shown to exist depending on the size of the child allowance.

This paper analyses the dynamics of a simple overlapping generations economy with endogenous longevity, endogenous fertility and private transfers from children to parents. In this context, it is shown that both the public provision of health care services, which determines the individual length of life, and the size of the intra-family transfer ma...

This paper investigates the steady state and dynamical effects of two historical alternatives as a means of old-age insurance – i.e., voluntary intra-family transfers from young to old members versus pay-as-you-go public pensions –, in a general equilibrium overlapping generations model with children as a desirable good. It is shown that the shift...

We examine how fertility reacts to the public provision of child allowances in a small open economy with overlapping generations. When the labour market is competitive, we find that a child allowance policy acts as a fertility-enhancing device. In contrast, when the labour market is unionised the child policy may be ineffective.

This paper aims to study the stability issue in a Cournot duopoly with codetermined firms. We show that when both firms codetermine employment together with decentralised employees' representatives, a rise in wages acts as an economic (de)stabiliser when the wage is fairly (high) low, while under profit maximisation a rise in wages always acts as a...

Using an overlapping-generations small open economy with endogenous lifetime a la Chakraborty (2004), we show that an increase in public investments in health is beneficial to life expectancy but can actually reduce both saving and domestic income per worker. Moreover, using the notion of A-efficiency introduced by Golosov et al. (2007) in a contex...

We analyse the dynamics of a Cournot duopoly game with heterogeneous players to investigate the effects of micro-founded differentiated products demand. The present analysis, which modifies and extends Zhang et al. (2007) Zhang, J., Da, Q., Wang, Y., 2007. Analysis of nonlinear duopoly game with heterogeneous players. Economic Modelling 24, 138–148...

An overlapping generation’s small open economy with endogenous fertility and time cost of children is analysed to show that the command optimum can be decentralised in a market setting using a PAYG transfer from the young to the old and a tax-cum-subsidy policy (i.e., a linear wage tax on labour income collected and rebated in a lump-sum way within...

This study analyses the dynamics of a two-dimensional overlapping generations economy with endogenous labour supply à la Reichlin (1986) and aspirations, i.e. effective consumption by individuals of the current generation depends on the standard of living (based on consumption experience) of those that belong to the previous generation. We show tha...