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Price-quantity competition with varying toughness

Author

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  • d’ASPREMONT, Claude
  • DOS SANTOS FERREIRA, Rodolphe

Abstract

In order to formalize the variety of oligopolistic competition regimes, we adopt an approach (pioneered by Shubik, 1959) where firms behave strategically both in price and quantity. The corresponding concept of oligopolistic equilibriumallo ws for a parameterized continuum of regimes with varying competitive toughness. In particular, the Cournot and the competitive outcomes coincide, respectively, with the softest and the toughest oligopolistic equilibrium outcome. The set of all equilibrium outcomes are compared with those obtained in three alternative approaches, respectively based on pricing-schemes, conjecturalvariations and supply functions. Finally, we explore the possibility of endogenizing strategically the choice of competitive toughness by the firms.
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Suggested Citation

  • d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2009. "Price-quantity competition with varying toughness," LIDAM Reprints CORE 2085, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2085
    DOI: 10.1016/j.geb.2008.03.001
    Note: In : Games and Economic Behavior, 65(1), 62-82, 2009
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    Cited by:

    1. Ushchev, Philip & Zenou, Yves, 2018. "Price competition in product variety networks," Games and Economic Behavior, Elsevier, vol. 110(C), pages 226-247.
    2. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2013. "The empirical content of Cournot competition," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1552-1581.
    3. d'Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2010. "Oligopolistic competition as a common agency game," Games and Economic Behavior, Elsevier, vol. 70(1), pages 21-33, September.
    4. Jacques THEPOT, 2018. "Pricing algorithms in oligopoly: theory and antitrust implications," Working Papers of LaRGE Research Center 2018-04, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    5. Cornand, Camille & Dos Santos Ferreira, Rodolphe, 2020. "Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 101-111.
    6. Rodolphe Dos Santos Ferreira & Teresa Lloyd-Braga & Leonor Modesto, 2016. "Could competition always raise the risk of bank failure?," Working Papers of BETA 2016-27, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. Robert A. Ritz, 2018. "Oligopolistic competition and welfare," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 7, pages 181-200, Edward Elgar Publishing.
    8. Claude d’Aspremont & Rodolphe Dos Santos Ferreira, 2014. "Household behavior and individual autonomy: an extended Lindahl mechanism," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(3), pages 643-664, April.
    9. Bos, Iwan & Vermeulen, Dries, 2021. "On pure-strategy Nash equilibria in price–quantity games," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    10. Rodolphe Dos Santos Ferreira, 2021. "When Muth’s entrepreneurs meet Schrödinger’s cat," Revue d'économie politique, Dalloz, vol. 131(3), pages 449-459.
    11. d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2009. "Household behavior and individual autonomy," LIDAM Discussion Papers CORE 2009022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    12. Victor J. Tremblay, 2025. "CEO bias and the degree of industry competition," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(1), pages 175-191, March.
    13. Camille Cornand & Rodolphe dos Santos Ferreira, 2015. "Playing the Game the others want to play: Keynes’ beauty contest revisited," Post-Print halshs-01147056, HAL.
    14. Duarte Brito & Margarida Catalão-Lopes, 2023. "Cournot–Bertrand endogenous behavior in a differentiated oligopoly with entry deterrence," Theory and Decision, Springer, vol. 95(1), pages 55-78, July.
    15. Farm, Ante, 2013. "Price Formation in Consumer Markets," Working Paper Series 1/2013, Stockholm University, Swedish Institute for Social Research.
    16. Jacques Thépot, 2021. "Pricing algorithms in oligopoly with decreasing returns," Theory and Decision, Springer, vol. 91(4), pages 493-515, November.
    17. Claude, DASPREMONT & Rodolphe, DOS SANTOS FERREIRA & Jacques, THEPOT, 2007. "Hawks and doves in segmented markets : a formal approach to competitive aggressiveness," Discussion Papers (ECON - Département des Sciences Economiques) 2007039, Université catholique de Louvain, Département des Sciences Economiques.
    18. Escrihuela-Villar Marc, 2016. "On Merger Profitability and the Intensity of Rivalry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 1203-1212, April.

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