Correlated Demand Shocks and Price Wars during Booms
The supergame-theoretic model of price competition (Rotemberg and Saloner, 1986) is reexamined in the case of serially correlate demand shocks. The equilibrium price is shown to exhibit the same counter-cyclical movement as the i.i.d. case if the discount factor and the number of firms satisfy a certain relationship. Copyright 1991 by The Review of Economic Studies Limited.
Volume (Year): 58 (1991)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0034-6527|
When requesting a correction, please mention this item's handle: RePEc:bla:restud:v:58:y:1991:i:1:p:171-80. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.