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Kreps And Scheinkman With Product Differentiation: An Expository Note

Author

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  • Stephen Martin

    (Institute of Economics, University of Copenhagen)

Abstract

Kreps and Scheinkman´s (1983) celebrated result is that in a two-stage model of a market with homogeneous products in which firms noncooperatively pick capacities in the first stage and set prices in the second stage, the equilibrium outcome is that of a one-shot Cournot game. This note derives capacity reaction functions for the first stage and extends the Kreps and Scheinkman result to the case of differentiated products.

Suggested Citation

  • Stephen Martin, 1999. "Kreps And Scheinkman With Product Differentiation: An Expository Note," CIE Discussion Papers 1999-11, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:1999-11
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    File URL: http://www.econ.ku.dk/cie/dp/dp_1997-1999/1999-11.pdf/
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    Citations

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    Cited by:

    1. Hamilton, Stephen F. & Bontems, Philippe & Lepore, Jason, 2013. "Oligopoly Intermediation, Relative Rivalry, and the Mode of Competition," IDEI Working Papers 818, Institut d'Économie Industrielle (IDEI), Toulouse.
    2. Vital Anderhub & Werner Güth & Ulrich Kamecke & Hans-Theo Normann, 2003. "Capacity Choices and Price Competition in Experimental Markets," Experimental Economics, Springer;Economic Science Association, vol. 6(1), pages 27-52, June.
    3. Christiaan Behrens & Mark Lijesen, 2012. "Capacity Choice under Uncertainty with Product Differentiation," Tinbergen Institute Discussion Papers 12-113/VIII, Tinbergen Institute, revised 20 Feb 2014.

    More about this item

    Keywords

    Cournot model; Bertrand model; Kreps and Scheinkman model; product differentiation;
    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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