The paper analyses the effect of uncertainty in a two stage duopoly model in which firms first choose capacity, then prices. We show that no pure strategy Nash equilibrium exists regardless of whether the realization of demand is known to firms before or after they choose their prices. On the other hand, we show that a mixed strategy equilibrium exists.
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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number
89-08.
Length: 14 pages Date of creation: Mar 1989 Date of revision: Handle: RePEc:kud:kuiedp:8908
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