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Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem

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  • R. M. Cyert
  • M. H. DeGroot

Abstract

Introduction, 410. — Single-period versus multiperiod decision making, 411. — Simultaneous choice in a multiperiod process, 413. — Alternating choice in a multiperiod process, 416. — The method of backward induction, 417.— General quadratic profit functions, 420. — Reduced quadratic profit functions, 422. — Asymptotic results, 425. — The cost of competition and the benefits of trust, 427. — Conclusion, 428.

Suggested Citation

  • R. M. Cyert & M. H. DeGroot, 1970. "Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 410-429.
    • Handle: RePEc:oup:qjecon:v:84:y:1970:i:3:p:410-429.
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    Cited by:

    1. Holcomb, James H. & Nelson, Paul S., 1997. "The role of monitoring in duopoly market outcomes," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(1), pages 79-93.
    2. Lau, Sau-Him Paul, 2001. "Aggregate Pattern of Time-dependent Adjustment Rules, II: Strategic Complementarity and Endogenous Nonsynchronization," Journal of Economic Theory, Elsevier, vol. 98(2), pages 199-231, June.
    3. Jens Prüfer & Christoph Schottmüller, 2021. "Competing with Big Data," Journal of Industrial Economics, Wiley Blackwell, vol. 69(4), pages 967-1008, December.
    4. AMIR, Rabah, 2001. "Stochastic games in economics and related fields: an overview," LIDAM Discussion Papers CORE 2001060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. John M. Hartwick & Philip G. Hartwick, 1971. "Duopoly in Space," Canadian Journal of Economics, Canadian Economics Association, vol. 4(4), pages 485-505, November.
    6. Guillermo Caruana & Liran Einav, 2008. "Production targets," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 990-1017, December.
    7. Charles A. Holt Jr., 1979. "Forecasting Rules as Equilibrium Strategies in Duopoly Models," The American Economist, Sage Publications, vol. 23(2), pages 31-36, October.
    8. Leufkens, Kasper & Peeters, Ronald, 2011. "Price dynamics and collusion under short-run price commitments," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 134-153, January.
    9. HUANG Weihong, 2009. "Price-taking Strategy Versus Dynamic Programming in Oligopoly," Economic Growth Centre Working Paper Series 0904, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    10. Ulrich Doraszelski & Kenneth L. Judd, 2019. "Dynamic stochastic games with random moves," Quantitative Marketing and Economics (QME), Springer, vol. 17(1), pages 59-79, March.
    11. Richard Arend, 2009. "Defending against rival innovation," Small Business Economics, Springer, vol. 33(2), pages 189-206, August.
    12. Frederick I. Johnson, 1983. "On the Stability of Commodity Cartels," The American Economist, Sage Publications, vol. 27(2), pages 34-36, October.
    13. Joseph Farrell & Jonathan B. Baker, 2021. "Natural Oligopoly Responses, Repeated Games, and Coordinated Effects in Merger Analysis: A Perspective and Research Agenda," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 103-141, February.
    14. Barry Nalebuff, 1988. "Minimal Nuclear Deterrence," Journal of Conflict Resolution, Peace Science Society (International), vol. 32(3), pages 411-425, September.
    15. Lau, Sau-Him Paul, 1997. "A note on the Markov perfect equilibrium of a linear-quadratic alternating-move game," Economics Letters, Elsevier, vol. 57(1), pages 51-56, November.
    16. Zvi Bodie & Benjamin M. Friedman, 1977. "Heterogeneous-Expectations Model of the Value of Bonds Bearing Call Options," NBER Working Papers 0218, National Bureau of Economic Research, Inc.
    17. Eaton, Jonathan & Engers, Maxim, 1992. "Sanctions," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 899-928, October.
    18. Doraszelski, Ulrich & Escobar, Juan F., 2019. "Protocol invariance and the timing of decisions in dynamic games," Theoretical Economics, Econometric Society, vol. 14(2), May.
    19. Scott Moss & Huw David Dixon & Steven Wallis, 1995. "Evaluating Competitive Strategies," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 4(4), pages 245-258, December.
    20. Iskakov, A. & Iskakov, M., 2017. "In Search of a Generalized Concept of Rationality," Journal of the New Economic Association, New Economic Association, vol. 34(2), pages 181-189.
    21. Sibdari, Soheil & Pyke, David F., 2014. "Dynamic pricing with uncertain production cost: An alternating-move approach," European Journal of Operational Research, Elsevier, vol. 236(1), pages 218-228.
    22. Leufkens, K. & Peeters, R.J.A.P., 2006. "Alternating-move hotelling with demand shocks," Research Memorandum 039, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    23. Dutta, Prajit K., 2012. "Coordination need not be a problem," Games and Economic Behavior, Elsevier, vol. 76(2), pages 519-534.
    24. Leufkens, Kasper & Peeters, Ronald, 2008. "Intertemporal price competition with exogenous demand shocks," Economics Letters, Elsevier, vol. 99(2), pages 301-303, May.
    25. Zhao Yun & Bi Chongren, 2019. "An Agent-Based Simulation Model of Knowledge Spillover Under the Influence of High-Speed Railway," Journal of Systems Science and Information, De Gruyter, vol. 7(2), pages 99-114, April.

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