Can prices be insensitive to unit cost variations? A game-theoretic alternative to the kinked demand curve explanation
We provide a game-theoretic alternative of the kinked demand curve explanation of rigid prices. We analyze a duopoly where firms choose quantities and objectives. We identify cases under which firms choose to maximize their revenue. Under these cases, prices are insensitive to unit costs.
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- Rotemberg, Julio J & Saloner, Garth, 1987.
"The Relative Rigidity of Monopoly Pricing,"
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American Economic Association, vol. 77(5), pages 917-926, December.
- Julio J. Rotemberg & Garth Saloner, 1986. "The Relative Rigidity of Monopoly Pricing," NBER Working Papers 1943, National Bureau of Economic Research, Inc.
- Julio Rotemberg & Garth Saloner, 1986. "The Relative Rigidity of Monopoly Pricing," Working papers 414, Massachusetts Institute of Technology (MIT), Department of Economics.
- Sen, Debapriya, 2004. "The kinked demand curve revisited," Economics Letters, Elsevier, vol. 84(1), pages 99-105, July.
- Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-599, May.
- R. L. Hall & C. J. Hitch, 1939. "Price Theory And Business Behaviour," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 12-45.
- Bhaskar, V., 1988. "The kinked demand curve: A game-theoretic approach," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 373-384. Full references (including those not matched with items on IDEAS)
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