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Dynamic coordination with timing frictions: theory and applications

Author

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  • Guimarães, Bernardo de Vasconcellos
  • Machado, Caio Henrique
  • Pereira, Ana Elisa Gonçalves
Abstract
We start by presenting the general model of dynamic coordination with timing frictions and some key theoretical results. We prove the model features a unique rationalizable equilibrium, present a method to solve the social planner problem and derive expressions for the equilibrium threshold in limiting cases. With this toolkit in hand, we get analytical results for a case with linear preferences and present several applications, ranging from network externalities to statistical discrimination and to macroeconomics. Besides generating insights for speci c questions, the applications illustrate the potential of the model to accommodate a large set of economic problems. Last, we show extensions of the framework that allow for endogenous hazard rates, preemption motives and ex-ante heterogeneous agents.

Suggested Citation

  • Guimarães, Bernardo de Vasconcellos & Machado, Caio Henrique & Pereira, Ana Elisa Gonçalves, 2017. "Dynamic coordination with timing frictions: theory and applications," Textos para discussão 461, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    • Handle: RePEc:fgv:eesptd:461
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    3. Adriana Gama & Rim Lahmandi-Ayed & Ana Elisa Pereira, 2020. "Entry and mergers in oligopoly with firm-specific network effects," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(4), pages 1139-1164, November.

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