IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v25y1992i2p281-93.html
   My bibliography  Save this article

Mixed Strategy Trade Equilibria

Author

Listed:
  • Michael R. Baye
  • Casper G. De Vries

Abstract

Two major paradigms prevail in trade theory: perfect competition and monopolistic competition. In the former case, only prices are important whereas product characteristics are important in the latter case. In both instances, pure-strategy equilibria exist. This paper considers the hybrid situation where some customers care only about the price while others have a brand preference or care about product characteristics. It is shown that an equilibrium in pure strategies does not exist but that a mixed-strategy equilibrium does exist. This in turn implies endogenous uncertainty in the pattern, terms, and the gains from trade.

Suggested Citation

  • Michael R. Baye & Casper G. De Vries, 1992. "Mixed Strategy Trade Equilibria," Canadian Journal of Economics, Canadian Economics Association, vol. 25(2), pages 281-293, May.
  • Handle: RePEc:cje:issued:v:25:y:1992:i:2:p:281-93
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0008-4085%28199205%2925%3A2%3C281%3AMSTE%3E2.0.CO%3B2-M
    Download Restriction: only available to JSTOR subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dimitra Petropoulou, 2007. "Competing for Contacts: Network Competition, Trade Intermediation and Fragmented Duopoly," Economics Series Working Papers 371, University of Oxford, Department of Economics.
    2. Roy, Santanu, 2000. "Strategic segmentation of a market," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1279-1290, December.
    3. Michal Ostatnicky, 2010. "Oligopolistic Price Competition with Informed and Uninformed Buyers," CERGE-EI Working Papers wp413, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. Fisher, Eric ON. & Wilson, Charles A., 1995. "Price competition between two international firms facing tariffs," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 67-87, March.
    5. Petropoulou, Dimitra, 2008. "Competing for contacts: network competition, trade intermediation and fragmented duopoly," LSE Research Online Documents on Economics 19630, London School of Economics and Political Science, LSE Library.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:25:y:1992:i:2:p:281-93. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler). General contact details of provider: http://edirc.repec.org/data/ceaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.