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Hawks and Doves in Segmented Markets: Profit Maximization with Varying Competitive Aggressiveness

Author

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  • Claude d'Aspremont
  • Rodolphe Dos Santos Ferreira
  • Jacques Thépot

Abstract

We consider a duopoly, each firm supplying a captive and a contested segment. Starting from two extreme formulations of the profit maximization objective, we introduce a parameterized class of managerial objective functions, involving price-quantity pairs as strategic variables but corresponding to different managerial attitudes. By specifying the parameters of competitive aggressiveness, we recover classical competition regimes. The model is extended to analyze the strategic choice of managerial aggressiveness, and to examine the implications of changes in the intensity of competition. In order to endogenize the competitive aggressiveness parameters, a more primitive price-quantity model introduces the possibility of consumer price discounting.

Suggested Citation

  • Claude d'Aspremont & Rodolphe Dos Santos Ferreira & Jacques Thépot, 2016. "Hawks and Doves in Segmented Markets: Profit Maximization with Varying Competitive Aggressiveness," Annals of Economics and Statistics, GENES, issue 121-122, pages 45-66.
    • Handle: RePEc:adr:anecst:y:2016:i:121-122:p:45-66
    DOI: 10.15609/annaeconstat2009.121-122.45
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    Cited by:

    1. Cornand, Camille & Dos Santos Ferreira, Rodolphe, 2020. "Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 101-111.
    2. Jacques THEPOT, 2018. "Pricing algorithms in oligopoly: theory and antitrust implications," Working Papers of LaRGE Research Center 2018-04, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    3. Duarte Brito & Margarida Catalão-Lopes, 2023. "Cournot–Bertrand endogenous behavior in a differentiated oligopoly with entry deterrence," Theory and Decision, Springer, vol. 95(1), pages 55-78, July.

    More about this item

    Keywords

    Competitive Aggressiveness; Segmented Markets; Competition Regimes; Delegation; Consumer Price Discounting.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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