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The Choice of Prices vs. Quantities under Uncertainty

Author

Listed:
  • Markus Reisinger
  • Ludwig Ressner

Abstract

If duopolistic firms can choose their strategy variable, uncertainty about demand conditions and the degree of substitutability have countervailing effects on variable choice. High uncertainty favors prices, while close substitutability favors quantities. For intermediate values, a hybrid equilibrium exists.

Suggested Citation

  • Markus Reisinger & Ludwig Ressner, 2006. "The Choice of Prices vs. Quantities under Uncertainty," Working Papers 007, Bavarian Graduate Program in Economics (BGPE).
  • Handle: RePEc:bav:wpaper:007_ressner
    as

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    File URL: http://www.bgpe.de/texte/DP/007_ressner.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
    2. Ricardo Reis, 2006. "Inattentive Producers," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 793-821.
    3. Paul Klemperer & Margaret Meyer, 1986. "Price Competition vs. Quantity Competition: The Role of Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 618-638, Winter.
    4. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Competition; Strategy Variables; Demand Uncertainty;
    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

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