Dynamic demand and noncompetitive intertemporal output adjustments
This paper integrates dynamics on the demand and on the supply side, which are characteristic for many goods, in particular fuels, due to costly adjustments. Furthermore, firms often pursue a quantity strategy and decide on output adjustments, additional capacities, etc. instead of fixing prices, e.g., OPEC moved from posting prices to adjusting output in 1986. This paper provides a corresponding framework (surprisingly ignored in the literature) and derives intertemporal market equilibria: cooperative, and noncooperative in open loop and in Markov strategies. The equilibrium in Markov strategies is different, mostly opposite to the much discussed sticky price models, the qualitative properties are non-trivial and some of them are even surprising, e.g., increased demand sluggishness can raise supply.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dockner, Engelbert J, 1992. "A Dynamic Theory of Conjectural Variations," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 377-95, December.
- Ramanathan, R., 1999. "Short- and long-run elasticities of gasoline demand in India: An empirical analysis using cointegration techniques," Energy Economics, Elsevier, vol. 21(4), pages 321-330, August.
- Lucas, Robert E, Jr & Prescott, Edward C, 1971. "Investment Under Uncertainty," Econometrica, Econometric Society, vol. 39(5), pages 659-81, September.
- Radner, Roy & Richardson, Thomas J., 2003. "Monopolists and viscous demand," Games and Economic Behavior, Elsevier, vol. 45(2), pages 442-464, November.
- David J. Salant & Glenn A. Woroch, 1992. "Trigger Price Regulation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 29-51, Spring.
- Karp, Larry, 1992. "Social Welfare in a Common Property Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 353-72, May.
- Salo, Seppo & Tahvonen, Olli, 2001. "Oligopoly equilibria in nonrenewable resource markets," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 671-702, May.
- Pindyck, Robert S, 1978. "Gains to Producers from the Cartelization of Exhaustible Resources," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 238-51, May.
- Alves, Denisard C. O. & De Losso da Silveira Bueno, Rodrigo, 2003. "Short-run, long-run and cross elasticities of gasoline demand in Brazil," Energy Economics, Elsevier, vol. 25(2), pages 191-199, March.
- Zhao, Jijun & Szidarovszky, Ferenc, 2008. "N-firm oligopolies with production adjustment costs: Best responses and equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 87-99, October.
- Driskill, Robert A. & McCafferty, Stephen, 1989. "Dynamic duopoly with adjustment costs: A differential game approach," Journal of Economic Theory, Elsevier, vol. 49(2), pages 324-338, December.
- Jun, Byoung & Vives, Xavier, 2004. "Strategic incentives in dynamic duopoly," Journal of Economic Theory, Elsevier, vol. 116(2), pages 249-281, June.
- Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, June.
- Karp, Larry S. & Perloff, Jeffrey M., 1993.
"Open-loop and feedback models of dynamic oligopoly,"
International Journal of Industrial Organization,
Elsevier, vol. 11(3), pages 369-389, September.
- Karp, Larry & Perloff, Jeffrey M, 1988. "Open-loop and feedback models of dynamic oligopoly," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7pn779rc, Department of Agricultural & Resource Economics, UC Berkeley.
- Wirl, Franz, 1991. "Energy demand and consumer price expectations : An empirical investigation of the consequences from the recent oil price collapse," Resources and Energy, Elsevier, vol. 13(3), pages 241-262, September.
- Hyndman, Kyle, 2008. "Disagreement in bargaining: An empirical analysis of OPEC," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 811-828, May.
- Salant, Stephen W, 1976. "Exhaustible Resources and Industrial Structure: A Nash-Cournot Approach to the World Oil Market," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1079-93, October.
- Bolle, Friedel, 1986. "On the Oligopolistic Extraction of Non-renewable Common-Pool Resources," Economica, London School of Economics and Political Science, vol. 53(212), pages 519-27, November.
- Reynolds, Stanley S., 1991. "Dynamic oligopoly with capacity adjustment costs," Journal of Economic Dynamics and Control, Elsevier, vol. 15(3), pages 491-514, July.
- Reynolds, Stanley S, 1987. "Capacity Investment, Preemption and Commitment in an Infinite Horizon Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 69-88, February.
- Wirl, Franz & Feichtinger, Gustav, 2002. "Intrafamiliar Consumption and Saving under Altruism and Wealth Considerations," Economica, London School of Economics and Political Science, vol. 69(273), pages 93-111, February.
- Lambertini, Luca & Mantovani, Andrea, 2006.
"Identifying reaction functions in differential oligopoly games,"
Mathematical Social Sciences,
Elsevier, vol. 52(3), pages 252-271, December.
- L. Lambertini & A. Mantovani, 2004. "Identifying Reaction Functions in Differential Oligopoly Games," Working Papers 518, Dipartimento Scienze Economiche, Universita' di Bologna.
- Wirl, Franz, 2007. "Do multiple Nash equilibria in Markov strategies mitigate the tragedy of the commons?," Journal of Economic Dynamics and Control, Elsevier, vol. 31(11), pages 3723-3740, November.
- repec:cup:cbooks:9780521637329 is not listed on IDEAS
- Hogan, William W., 1989. "A dynamic putty--semi-putty model of aggregate energy demand," Energy Economics, Elsevier, vol. 11(1), pages 53-69, January.
- Tsutsui, Shunichi & Mino, Kazuo, 1990. "Nonlinear strategies in dynamic duopolistic competition with sticky prices," Journal of Economic Theory, Elsevier, vol. 52(1), pages 136-161, October.
- R. Cellini & L. Lambertini, 2005. "Weak and Strong Time Consistency in Differential Oligopoly Games with Capital Accumulation," Working Papers 544, Dipartimento Scienze Economiche, Universita' di Bologna.
- Lapham, Beverly & Ware, Roger, 1994. "Markov puppy dogs and related animals," International Journal of Industrial Organization, Elsevier, vol. 12(4), pages 569-593, December.
- Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
- Fershtman, Chaim & Kamien, Morton I, 1987. "Dynamic Duopolistic Competition with Sticky Prices," Econometrica, Econometric Society, vol. 55(5), pages 1151-64, September.
When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:28:y:2010:i:3:p:220-229. 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: (Zhang, Lei)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.