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Optimal Extortion and Political Risk Insurance

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Academic year: 2021

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Figure

Figure 1: The effect of an increase of insurance coverage from λ i to ¯ λ i > λ i when e i (·) > 0 (figure on the left) and when e i (·) < 0 (figure on the right) on the virtual type of firm i and its risk of expropriation.
Figure 2: Cross effects of insurance coverage with two initially symmetric firms, when firm 1’s insurance coverage increases.

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