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Chapter 1: Downstream Competition and the Effects of Buyer Power The first chapter examines the interaction between buyer power and competition intensity in the downstream market in affecting consumer and total welfare. We study a model where oligopolistic retailers compete in quantity in the downstream market and one of them is a large retailer that has its own exclusive supplier. Negotiation between this retailer and its supplier is modeled as a generalized Nash bargaining game. We demonstrate that an increase in the buyer power of the large retailer against its supplier leads to a fall in retail price and consequently an improvement in consumer surplus and this is true even in the extreme case where the downstream market is served by a monopoly. More interestingly, we find that the effects of buyer power are large when the intensity of downstream competition is low, with the effects being the largest in the case of downstream monopoly. This suggests that buyer power and downstream competition are substitutes. Chapter 2: Subsidy, Product Diversity and Buyer Power The objective of the second chapter is to analyze the effectiveness of government subsidies in promoting product diversity when the downstream firm (a retailer) has buyer power. We extend the standard Dixit-Stiglitz model of monopolistic competition and compare the effects of subsidies on equilibrium number of product varieties and social welfare in the case where products are sold directly to consumers and the case where they are sold through a monopoly retailer with buyer power. Two types of subsidies are considered, a subsidy on marginal cost and a subsidy on fixed cost. We find that while the two types of subsides have different effects on the quantity and retail price of each variety, they both raise the number of product varieties and the social welfare. Moreover, a combination of the two types of subsidies is able to achieve the social optimum. These results are true even when products are distributed through a downstream monopoly retailer who has all the bargaining power, but the mechanism through which a subsidy increases product varieties is different. In comparison with the case where products are distributed directly to consumers, retailer buyer power reduces product variety and social welfare. Furthermore subsidies become less effective in the presence of buyer power. To be more specific, retailer buyer power has both a level effect and a marginal effect on product diversity. At any given subsidy rate, the equilibrium number of varieties is smaller and a marginal increase in subsidy leads to a smaller increase in the number of varieties. Chapter 3: Subsidy on Complementary Products in a Model of Monopolistic Competition The third chapter seeks to re-examine the market provision of product diversity under monopolistic competition and the effects of an infinitesimal subsidy on product variety and social welfare in the case of complementary products. This examination builds on the standard Dixit-Stiglitz model of monopolistic competition but assumes an alternative demand linkage. The results show that, different from the case of substitutable products, demand complementarity leads to multiple equilibriums and the number of product varieties could be higher or lower than the constrained optimum depending on the level of the fixed cost of production. When the fixed costs are small, the market yields too many products and an infinitesimal subsidy exacerbates the problem leading to an over-supply of product varieties. On the other hand, when the fixed costs are large, there are too few products and in some cases the complementary goods industry becomes non-existent. A subsidy that induces a switch of equilibriums enhances product variety and improves social welfare.

Chapter 1: Downstream Competition and the Effects of Buyer Power The first chapter examines the interaction between buyer power and competition intensity in the downstream market in affecting consumer and total welfare. We study a model where oligopolistic retailers compete in quantity in the downstream market and one of them is a large retailer that has its own exclusive supplier. Negotiation between this retailer and its supplier is modeled as a generalized Nash bargaining game. We demonstrate that an increase in the buyer power of the large retailer against its supplier leads to a fall in retail price and consequently an improvement in consumer surplus and this is true even in the extreme case where the downstream market is served by a monopoly. More interestingly, we find that the effects of buyer power are large when the intensity of downstream competition is low, with the effects being the largest in the case of downstream monopoly. This suggests that buyer power and downstream competition are substitutes. Chapter 2: Subsidy, Product Diversity and Buyer Power The objective of the second chapter is to analyze the effectiveness of government subsidies in promoting product diversity when the downstream firm (a retailer) has buyer power. We extend the standard Dixit-Stiglitz model of monopolistic competition and compare the effects of subsidies on equilibrium number of product varieties and social welfare in the case where products are sold directly to consumers and the case where they are sold through a monopoly retailer with buyer power. Two types of subsidies are considered, a subsidy on marginal cost and a subsidy on fixed cost. We find that while the two types of subsides have different effects on the quantity and retail price of each variety, they both raise the number of product varieties and the social welfare. Moreover, a combination of the two types of subsidies is able to achieve the social optimum. These results are true even when products are distributed through a downstream monopoly retailer who has all the bargaining power, but the mechanism through which a subsidy increases product varieties is different. In comparison with the case where products are distributed directly to consumers, retailer buyer power reduces product variety and social welfare. Furthermore subsidies become less effective in the presence of buyer power. To be more specific, retailer buyer power has both a level effect and a marginal effect on product diversity. At any given subsidy rate, the equilibrium number of varieties is smaller and a marginal increase in subsidy leads to a smaller increase in the number of varieties. Chapter 3: Subsidy on Complementary Products in a Model of Monopolistic Competition The third chapter seeks to re-examine the market provision of product diversity under monopolistic competition and the effects of an infinitesimal subsidy on product variety and social welfare in the case of complementary products. This examination builds on the standard Dixit-Stiglitz model of monopolistic competition but assumes an alternative demand linkage. The results show that, different from the case of substitutable products, demand complementarity leads to multiple equilibriums and the number of product varieties could be higher or lower than the constrained optimum depending on the level of the fixed cost of production. When the fixed costs are small, the market yields too many products and an infinitesimal subsidy exacerbates the problem leading to an over-supply of product varieties. On the other hand, when the fixed costs are large, there are too few products and in some cases the complementary goods industry becomes non-existent. A subsidy that induces a switch of equilibriums enhances product variety and improves social welfare.

This thesis, which consists of three self-contained essays, examines, both theoretically and empirically, some of the economic and identity strategies and mechanisms that federated co-operatives, in particular, and strategic alliances, in general, can use to achieve co-operation and coordination. To accomplish this objective, the thesis uses a combination of industrial organization and game theory concepts from economics, insights from social and cognitive psychology, and evidence from in-depth interviews with decision-makers in the Co-operative Retailing System (CRS) - an association of 264 independent Western Canadian retail co-operatives and their wholesaler, Federated Co-operatives Ltd. (FCL).<p> Essay One combines a case study of the CRS with an examination, in a game-theoretic framework, of the co-operation and coordination problems arising among firms in alliances and the potential solutions to these problems suggested in the economics and business strategy literatures. One of the contributions of this essay is to provide examples of the mechanisms that can be used to implement these theoretical solutions in a business setting - i.e., the essay identifies practical ways for alliances to alter partner firms' payoffs, to provide private rewards, to monitor behaviour, to establish long term goals among partners, to build high group identification within the alliance, and to focus partners' expectations on the efficient outcomes. Another contribution of this essay is to identify some of the second-order co-operation problems that arise in strategic alliances - e.g., lack of incentives by alliance partners to contribute resources that are necessary to develop alliance management mechanisms - and to offer examples of the strategies that can be used to deal with these problems.<p> Essay Two draws upon social identity theory and develops an economic model of behaviour to show how the core firm in a strategic network can promote effective co-operation among network members by inducing them to identify with the network. In addition, the essay offers empirical evidence from the CRS that identity has successfully been used, together with economic mechanisms, to foster co-operation among member retails, and provides examples of the most important mechanisms that FCL, as the core firm in the CRS, has used to manage the identity of the retails. More generally, by incorporating the psychology (and sociology) of identity into an economic model of behaviour, Essay Two contributes to an emerging view that non-economic (behavioural) factors are complementary to the economic ones in the management of strategic partnerships.<p> Essay Three considers the collective action problems that arise in co-operatives when it comes to financing growth and identifies the conditions under which retained patronage can be an effective way for co-operatives to raise growth capital. The essay develops a game-theoretic model to examine the trade-off between the share of patronage refunds a co-operative wholesaler pays to member retails in cash and the share of patronage refunds it retains and invests, so as to provide retails with enough short-run benefits to encourage them to patronize their organization, while still retaining resources to invest in long-term growth. Analytical results show that when there are increasing returns in patronizing the co-operative wholesaler, retails' decisions to patronize their organization are complementary strategies and, as a result, multiple equilibria are possible. Some of these equilibria are ones with high patronage and high investment, while others are characterized by low patronage and low investment. Retails' expectations about the actions of their counterparts are critical in determining the prevailing equilibrium. The analysis also shows that the existence of the horizon problem further constraints the ability of the wholesaler to raise growth capital. Taken together, these results suggest that the retention of patronage refunds can be an effective way for the co-operative wholesaler to raise growth capital, provided it acts to focus retails' expectations on the 'good' equilibrium and to mitigate the horizon problem.<p> By examining the strategies and mechanisms that the CRS has used to achieve co-operation and coordination, and in so doing illustrating the mechanisms that firms can use to manage partner opportunism and prevent coordination failure, the thesis contributes to the alliance management literature. Firms today are increasingly forming strategic alliances with suppliers, buyers, and even competitors in order to achieve sustainable competitive advantage. However, despite their increasing popularity and value-creation potential, alliances more often fail than succeed, with alliance failure often attributed to opportunistic (non-co-operative) behaviour by one or more of the partners and to coordination failure. As a result, it is important to identify strategies and mechanisms that alliance partners can use to achieve co-operation and coordination, and thus realize the benefits from their association.<p> The thesis also contributes to the co-operative literature by shedding light on the age-old debate on whether federated co-operatives need to be centralized to ensure efficiency. In particular, the thesis shows that federated co-operatives can be efficient, provided they address the co-operation and coordination problems that arise among their members, and provides examples of the mechanisms that federated co-operatives can use to achieve co-operation and coordination. In addition, the thesis offers the first analytical treatment of how the horizon problem influences investment decisions in co-operatives.

This thesis, which consists of three self-contained essays, examines, both theoretically and empirically, some of the economic and identity strategies and mechanisms that federated co-operatives, in particular, and strategic alliances, in general, can use to achieve co-operation and coordination. To accomplish this objective, the thesis uses a combination of industrial organization and game theory concepts from economics, insights from social and cognitive psychology, and evidence from in-depth interviews with decision-makers in the Co-operative Retailing System (CRS) - an association of 264 independent Western Canadian retail co-operatives and their wholesaler, Federated Co-operatives Ltd. (FCL).<p> Essay One combines a case study of the CRS with an examination, in a game-theoretic framework, of the co-operation and coordination problems arising among firms in alliances and the potential solutions to these problems suggested in the economics and business strategy literatures. One of the contributions of this essay is to provide examples of the mechanisms that can be used to implement these theoretical solutions in a business setting - i.e., the essay identifies practical ways for alliances to alter partner firms' payoffs, to provide private rewards, to monitor behaviour, to establish long term goals among partners, to build high group identification within the alliance, and to focus partners' expectations on the efficient outcomes. Another contribution of this essay is to identify some of the second-order co-operation problems that arise in strategic alliances - e.g., lack of incentives by alliance partners to contribute resources that are necessary to develop alliance management mechanisms - and to offer examples of the strategies that can be used to deal with these problems.<p> Essay Two draws upon social identity theory and develops an economic model of behaviour to show how the core firm in a strategic network can promote effective co-operation among network members by inducing them to identify with the network. In addition, the essay offers empirical evidence from the CRS that identity has successfully been used, together with economic mechanisms, to foster co-operation among member retails, and provides examples of the most important mechanisms that FCL, as the core firm in the CRS, has used to manage the identity of the retails. More generally, by incorporating the psychology (and sociology) of identity into an economic model of behaviour, Essay Two contributes to an emerging view that non-economic (behavioural) factors are complementary to the economic ones in the management of strategic partnerships.<p> Essay Three considers the collective action problems that arise in co-operatives when it comes to financing growth and identifies the conditions under which retained patronage can be an effective way for co-operatives to raise growth capital. The essay develops a game-theoretic model to examine the trade-off between the share of patronage refunds a co-operative wholesaler pays to member retails in cash and the share of patronage refunds it retains and invests, so as to provide retails with enough short-run benefits to encourage them to patronize their organization, while still retaining resources to invest in long-term growth. Analytical results show that when there are increasing returns in patronizing the co-operative wholesaler, retails' decisions to patronize their organization are complementary strategies and, as a result, multiple equilibria are possible. Some of these equilibria are ones with high patronage and high investment, while others are characterized by low patronage and low investment. Retails' expectations about the actions of their counterparts are critical in determining the prevailing equilibrium. The analysis also shows that the existence of the horizon problem further constraints the ability of the wholesaler to raise growth capital. Taken together, these results suggest that the retention of patronage refunds can be an effective way for the co-operative wholesaler to raise growth capital, provided it acts to focus retails' expectations on the 'good' equilibrium and to mitigate the horizon problem.<p> By examining the strategies and mechanisms that the CRS has used to achieve co-operation and coordination, and in so doing illustrating the mechanisms that firms can use to manage partner opportunism and prevent coordination failure, the thesis contributes to the alliance management literature. Firms today are increasingly forming strategic alliances with suppliers, buyers, and even competitors in order to achieve sustainable competitive advantage. However, despite their increasing popularity and value-creation potential, alliances more often fail than succeed, with alliance failure often attributed to opportunistic (non-co-operative) behaviour by one or more of the partners and to coordination failure. As a result, it is important to identify strategies and mechanisms that alliance partners can use to achieve co-operation and coordination, and thus realize the benefits from their association.<p> The thesis also contributes to the co-operative literature by shedding light on the age-old debate on whether federated co-operatives need to be centralized to ensure efficiency. In particular, the thesis shows that federated co-operatives can be efficient, provided they address the co-operation and coordination problems that arise among their members, and provides examples of the mechanisms that federated co-operatives can use to achieve co-operation and coordination. In addition, the thesis offers the first analytical treatment of how the horizon problem influences investment decisions in co-operatives.

This Master thesis is the result of a study in which we looked at people's livelihoods - through the sustainable rural livelihoods analytical framework - from a coordination failure perspective. During three weeks spent in the district of Ribáuè, Mozambique, enabled us to conduct interviews with people from many different social categories and understand the conditions in which small-scale farmers live. The paper tackles issues related to development in general and governmental intervention and contributes to the debate about the type of growth which is on-going in Mozambique. What are the coordination failures that impact people's livelihoods in Mozambique, a country where strong economic growth does not seem to help the poorest to get out of poverty. / The Mozambican economy is characterised by a high level of employment in the agricultural sector. Most farmers are small-scale and farm for subsistence. As development at global level will continue to pressure these farmers to increase their productivity, the question is to know how this will affect the small-scale farmers’ capacity to improve their livelihoods. The economy of the African continent is predicted to rise substantially and countries like Mozambiquehave been praised for their staggering economic growth. However despite growth, the situation remains unchanged for many small-scale farmers. The intention of this research is then to look into the conditions in which small-scale agricultural activities take place. This study was carried out is the district of Ribáuè, located in the northern provinceof Nampula, Mozambique and adopts an abductive approach as it investigates coordination failures around farming activities. In other words, aspects concerning agricultural activities that are difficult to observe, will be included. The starting point for this argument is that it is impossible to obtain sustainable development (i.e. including small-scale farmers) without taking a holistic approach. Through this study, it becomes clear that small-scale farmers face a variety of obstacles from which patterns can be extracted. Strong emphasis is put on the importance of surrounding factors such as infrastructures, access to credit, wage work opportunities, access to inputs, extension services, and market access.  All these factors impact people’s livelihoods; and by investing in all of them in a coordinated way, it creates synergetic effects and boosts the potential for further development of each feature. This inter-connectivity becomes clear when considering that wage work opportunities are created when investments are made in the rehabilitation of infrastructures or the expansion of extension services. Furthermore, market access increases when the connectivity of remote farmers is improved and their livelihoods develop when their surplus can be sold. The amount of surplus farmers have is in turn affected by their financial capital, access to inputs, and access to extension services. Singling out one of these features as more important than the others risks missing the point and hindering sustainable development. This calls for big versatile government investments, in the form of big push policies, to ensure that these areas inter-connect and to create the highest possible levels of synergy.

Cette thèse étudie les performances du marché du travail dans une économie susceptible de présenter plusieurs équilibres, et les implications d’une telle configuration pour la politique économique. Elle comporte quatre essais, traitant chacun d’un aspect spécifique de cette problématique. En premier lieu, l’analyse économétrique des séries temporelles de taux de chômage de quelques pays de l’OCDE, permettant notamment l’identification des changements de régimes et de leurs caractéristiques, apporte des évidences significatives à l’appui de l’hypothèse d’une multiplicité d’équilibres. En second lieu, on étudie les effets de l’introduction d’un salaire minimum obligatoire et d’une hausse de celui-ci dans un modèle statique de concurrence imparfaite avec négociations salariales au niveau de la firme, le facteur travail étant hétérogène. Si la hausse du salaire minimum est défavorable à l’emploi,l’introduction d’un salaire minimum en présence d’une multiplicité d’équilibres permet d’éliminer l’équilibre Pareto-inférieur. En troisième lieu, on étudie également les implications de l’existence d’équilibres multiples pour les politiques économiques, du fait de l’altération des propriétés dynamiques de l’économie, à travers l’analyse complète d’un modèle dynamique de concurrence imparfaite avec des négociations salariales individuelles et des frictions d’appariement sur le marché du travail. Enfin, on montre grâce à l’outil expérimental dans quelle mesure l’introduction d’une variable dite de tâche solaire, peut être source de défaut de coordination et d’inefficience dans une économie possédant deux équilibres Pareto-ordonnés. / This thesis analyzes the performances of labor market in an economy subject to multiple equilibria and the implications of such a configuration for economic policy. It contains four pieces of research, each dealing with a particular aspect of the general setting. First, the econometric analysis of the unemployment time series for several OECD countries,which allows the identification of regime switches and their characteristics, brings forth some significant evidence that the multiple equilibria framework is relevant. Second, the effect of the implementation and of the rise of the minimum wage are investigated through a static model, assuming imperfect competition, heterogeneous labor input and wage negotiations at the firm level. Though minimum wage hikes have an adverse effect on employment, the implementation of a binding minimum wage turns out to be an efficient tool for excluding the Pareto- inferior equilibrium. Third economic policy conditions are also affected because the existence of multiple equilibria alters the dynamic properties of the economy. This case has been investigated in the framework of a fully dynamic model assuming imperfect competition individual wage negotiations and matching frictions. Finally, a coordination game experiment confirms that the introduction of a sunspot can be a source of coordination failure and inefficiency in an economy with two Pareto-ranked equilibria.

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