Mixed Strategy Trade Equilibria
AbstractTwo major paradigms prevail in trade theory: perfect competition and monopolistic competition. In the former case, only prices are important whereas product characteristics are important in the latter case. In both instances, pure-strategy equilibria exist. This paper considers the hybrid situation where some customers care only about the price while others have a brand preference or care about product characteristics. It is shown that an equilibrium in pure strategies does not exist but that a mixed-strategy equilibrium does exist. This in turn implies endogenous uncertainty in the pattern, terms, and the gains from trade.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 25 (1992)
Issue (Month): 2 (May)
Contact details of provider:
Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Michal Ostatnicky, 2010. "Oligopolistic Price Competition with Informed and Uninformed Buyers," CERGE-EI Working Papers wp413, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Dimitra Petropoulou, 2008.
"Competing for Contacts: Network Competition, Trade Intermediation and Fragmented Duopoly,"
CEP Discussion Papers
dp0854, Centre for Economic Performance, LSE.
- Dimitra Petropoulou, 2007. "Competing for Contacts: Network Competition, Trade Intermediation and Fragmented Duopoly," Economics Series Working Papers 371, University of Oxford, Department of Economics.
- Fisher, Eric ON. & Wilson, Charles A., 1995. "Price competition between two international firms facing tariffs," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 67-87, March.
- Dimitra Petropoulou, 2008. "Competing for contacts: network competition, trade intermediation and fragmented duopoly," LSE Research Online Documents on Economics 19630, London School of Economics and Political Science, LSE Library.
- Roy, Santanu, 2000. "Strategic segmentation of a market," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1279-1290, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler).
If references are entirely missing, you can add them using this form.