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Congestion and Game in Capacity: a Duopoly Analysis in the Presence of Network Externalities

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  • André De Palma
  • Luc Leruth

Abstract

We consider the case of a duopoly selling perfect substitutes except for their level of capacity. Firms are playing a two-stage game in which they take capacities as given when they play in prices and anticipate the price outcome when they play in capacities. We analyze the case where consumers are homogeneous and where they are differentiated in their willingness to pay to avoid congestion.

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  • André De Palma & Luc Leruth, 1989. "Congestion and Game in Capacity: a Duopoly Analysis in the Presence of Network Externalities," Annals of Economics and Statistics, GENES, issue 15-16, pages 389-407.
    • Handle: RePEc:adr:anecst:y:1989:i:15-16:p:389-407
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