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A note on quantity precommitment, cournot outcome and asymmetric capacity costs

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  • Nicolas Gruyer

    (LEEA-ENAC Toulouse)

Abstract

This paper extends Kreps and Scheinkman's 1983 result, which shows that a production capacity choice stage followed by price competition yields the same outcome as a Cournot game, to a setting where capacity costs are asymmetric.

Suggested Citation

  • Nicolas Gruyer, 2009. "A note on quantity precommitment, cournot outcome and asymmetric capacity costs," Economics Bulletin, AccessEcon, vol. 29(1), pages 384-391.
    • Handle: RePEc:ebl:ecbull:eb-08l10042
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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I1-P40.pdf
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    References listed on IDEAS

    as
    1. Carl Davidson & Raymond Deneckere, 1986. "Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 404-415, Autumn.
    2. Paul Madden, 1998. "Elastic demand, sunk costs and the Kreps-Scheinkman extension of the Cournot model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(1), pages 199-212.
    3. Dan Kovenock & Raymond J. Deneckere, 1996. "Bertrand-Edgeworth duopoly with unit cost asymmetry (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 1-25.
    4. Dan Kovenock & Raymond Deneckere & Tom Faith & Beth Allen, 2000. "Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 501-530.
    5. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
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    Cited by:

    1. Wu, Xin-wang & Zhu, Quan-tao & Sun, Laixiang, 2012. "On equivalence between Cournot competition and the Kreps–Scheinkman game," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 116-125.
    2. Lepore Jason J, 2009. "Consumer Rationing and the Cournot Outcome," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-46, September.

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    More about this item

    Keywords

    Asymmetric costs;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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