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We propose a set-estimation approach to supermodular games using the restrictons of rationalizable strategies, which is a weaker solution concept than Nash equilibrium. The set of rationalizable strategies of a supermodular game forms a complete lattice, and are bounded above and below by two extremal Nash equilibria. We use a well-known alogrithm to compute the two extremal equilibria, and then construct moment inequalities for set estimation of the supermodular game. Finally, we conduct Monte Carlo experiments to illustrate how the estimated confidence sets vary in response to changes in the data generating process.

We develop an interactive framework to model speculation (over regulation) and regulation (of speculation) in a greenhouse gas (GHG) permits market. In our proposed model, big traders engage in speculation by strategically withholding and releasing permits to influence the temporal path of permit prices in order to maximize their profits. The national government/regulator has an incentive to stabilize permit prices by suitably manipulating stocks of permits. Thus, the GHG permits market can typically be characterized by circular interdependence in which big traders will be “gaming” the regulator to generate profits: the state of the market affects speculative behavior of traders that in turn impacts on government's behavior, which in turn impacts on the state of the market. The interactive framework explores the gaming between speculators and a regulator, or government, to shed crucial insights on the nature of equilibrium in possible global emissions trading schemes (GETS). By so doing, we are able to unravel potential pitfalls of any global trading system in pollution permits for arresting global warming. Once policy makers are aware of these pitfalls, for example, a “culture of speculation” as opposed to a culture of safety, they can devise a suitable mechanism to bypass these potential pitfalls.

This article aims to provide an exposition of evolutionary game theory which can be used for pedagogical purposes.

The exposition is presented as a mathematical model in order to cover the formal underpinnings of evolutionary game theory. The paper aims to illustrate the theory using some simple examples.

The paper discusses population games and describes the notion of revision protocols that agents use to change strategies. As an example of an evolutionary dynamic, the paper discusses the replicator dynamic in detail. It shows convergence of this dynamic to Nash equilibrium in simple 2 strategy games. The paper then applies this dynamic to a particular class of 3 strategy games to establish the possibility on cyclical behavior around a Nash equilibrium.

The paper can serve as an educational briefing for students and researchers who are new to the field of evolutionary game theory.

Artificial intelligence (AI) has become an input to the production of goods and services. Therefore, a general question is there that “How the labor hour/human resource will be replaced by the artificial intelligence?” To answer this question, the paper considers that both AI and the human resources (HR) are the inputs to the firm and explains the choice between the two with reference to the customer relationship management. The paper derives the individual firms and the industry demand functions of the AI and the HR when both are present in the production of the identical or closely related goods and services. Moreover, the paper also shows the strategic behavior of an individual firm with the industry in selecting the AI and the HR. It has been shown that the individual firm's choice in the industry depends on the choice of the industry leader. The paper explains the supermodular game between the firms in an industry.

Game theory, industrial organization and non-convexity theories have been used in this paper to identify the choice between the HR and the AI in the customer relationship management.

The paper explains analytically the preference and demand for AI in the industry. Individual firm's strategic behavior and decision on choosing AI and the industry equilibrium have been studied logically. Moreover, the paper gives some light on the question of employment in presence of AI. The paper proves that in the presence of AI, labor demand will not be reduced but both will be used.

This work proves for the first time using some logical derivation that AI will not crowd out labor from the market. Moreover, to run AI, labor should also be used. It has been proved that to complete a job with speed and quality, both AI and HR are to be used.

In this article we design an econometric test for monotone comparative statics (MCS) often found in models with multiple equilibria. Our test exploits the observable implications of the MCS prediction: that the extreme (high and low) conditiona l quantiles of the dependent variable increase monotonically with the explanatory variable. The main contribution of the article is to derive a likelihood-ratio test, which to the best of our knowledge is the first econometric test of MCS proposed in the literature. The test is an asymptotic “chi-bar squared” test for order restrictions on intermediate conditional quantiles. The key features of our approach are: (1) we do not need to estimate the underlying nonparametric model relating the dependent and explanatory variables to the latent disturbances; (2) we make few assumptions on the cardinality, location, or probabilities over equilibria. In particular, one can implement our test without assuming an equilibrium selection rule.

This paper aims to discuss a simulation study for a multi‐product, two‐echelon inventory replenishment system. The paper compares a one‐warehouse N‐retailer replenishment system to a two‐warehouse, N‐retailer system with cost per unit of distribution and delivery lead‐times as the performance measures. The purpose is to demonstrate that under specific circumstances a two warehouse N‐retailer inventory replenishment system provides better customer service without significant changes in the cost.

Mathematical modeling and simulation methodology is used to test the performance of the proposed two warehouse N‐retailer system and statistical analysis is used to compare the performance of several scenarios.

The two warehouse replenishment system indeed reduces delivery lead‐times, used as a measure of customer service, under specific conditions such as controllable freight costs.

Caution should be exercised when interpreting these findings as the historical data used was from a single source. The paper did not investigate the effects of variable shipping costs from the manufacturing plant, warehouse and retailer. Future research could also consider multiple second level warehouses.

The findings provide a persuasive argument for manufacturers struggling with performance issues and channel relationships. Moreover, in addition to contributing to efficiency of distribution, two level systems can also enhance ability to adapt to local market conditions and to unexpected demand variations.

The model examined in this paper addressed a specific case for one company. While freight costs and warehousing costs will vary across companies, the cost represented here may be used as a gauge for evaluating systems with cost structures in the vicinity of those for the company represented in this paper. Additionally, the model is amenable to substitution of other firms' cost structures.

The purpose of this paper is to apply a mathematical method of formal concept analysis (FCA) to facilitate evaluation of potential partners, and to select the most appropriate partner for horizontal strategic alliances. Horizontal collaboration between ship design firms is important in relation to business cyclicality in the industry. The workload in ship design firms drops during the troughs of the shipbuilding cycle and increases dramatically during the peaks of the cycle.

The proposed method of partnership selection applies FCA, which is based on mathematical lattice theory. FCA allows firms to evaluate and select the best suitable partners for horizontal interfirm cooperation from several possible candidate firms. Utilization of FCA allows a firm to visually analyze a potential partner for a horizontal strategic alliance.

The contribution of this study to the literature is twofold. First, it contributes to the literature on the application of FCA in management field. Second, this study contributes to the partner selection literature. The contribution of the study is an alternative quantitative method for partner selection based on FCA. FCA compliments qualitative approaches in the process of alternatives evaluation and decision‐making regarding partner selection for horizontal collaboration.

Practitioners from ship design firms can use the FCA tool to facilitate decision‐making relating to the screening of potential partners for horizontal cooperation with regard to pre‐specified selected criteria.

FCA has been marginally applied to aid managerial decision making. The FCA tool is valuable for practitioners from ship design firms to manage the selection of partners for horizontal collaboration. The FCA tool is associated with numerous advantages, notably, relative simplicity and versatility of visual analysis when compared with other mathematical approaches such as the analytic hierarchy process, the analytic network process, optimization modeling, and fuzzy set logic.

China’s government has been facing a trade-off in choosing between tenure reform and forest concessions to manage forest resources. The purpose of this paper is to investigate how the government’s policy choices can be affected by environmental benefits and the economic value of forests.

We build a simple theoretical model and employ province-level data.

The results show that the government will allocate less forestland to local people if environmental concerns are more important and privatize less forest if the economic benefits from forest are higher.

Therefore, the transformation of forest management policies reflects not only the government’s own preferences but also its gradual adjustment to the changing market and institutional environment.

The present paper provides a regulation approach that complements the growing literature on forest resource management.