Sequential Capacity and Price Choices in a Duopoly Model with Demand Uncertainty
This paper analyzes the effect of demand uncertainty in a two-stage duopoly model where firms first choose capacity then price, and shows that the equilibrium is sensitive to the decision structure of the model. If both the capacity choice and the price choice are made simultaneously, no pure strategy equilibrium exists. If prices are chosen sequentially, the pricing stage has two pure strategy equilibria, but only for one of these does a pure strategy equilibrium of the full game exist. Finally, if both capacities and prices are chosen sequentially, a pure strategy equilibrium with strong first mover advantages exists.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Mar 1989|
|Date of revision:|
|Publication status:||Published in: Journal of Economics/Zeitschrift für Nationalokonomie, 1990, 51(2) pp 121-144|
|Contact details of provider:|| Postal: |
Phone: (+45) 35 32 30 10
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk
More information through EDIRC
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.:
- Dixon, Huw, 1984. "The existence of mixed-strategy equilibria in a price-setting oligopoly with convex costs," Economics Letters, Elsevier, vol. 16(3-4), pages 205-212.
- Morten Hviid, 1989. "A Two Stage Duopoly Model with Demand Uncertainty," Discussion Papers 89-08, University of Copenhagen. Department of Economics.
- G.C. Archibald & B.C. Eaton & Richard Lipsey, 1982. "Address Models of Value Theory," Working Papers 495, Queen's University, Department of Economics.
- Ariel Rubinstein, 1988. "Comments on the interpretation of game theory (Now published in Econometrica, 59 (1991), pp.909-924.)," STICERD - Theoretical Economics Paper Series 181, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Raymond J. Deneckere & Dan Kovenock, 1992. "Price Leadership," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 143-162.
- Osborne, Martin J. & Pitchik, Carolyn, 1983.
"Price Competition in a Capacity-Constrained Duopoly,"
83-08, C.V. Starr Center for Applied Economics, New York University.
- Osborne, Martin J. & Pitchik, Carolyn, 1986. "Price competition in a capacity-constrained duopoly," Journal of Economic Theory, Elsevier, vol. 38(2), pages 238-260, April.
- Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 1-26.
- Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, June.
- Gal-Or, Esther, 1985. "First Mover and Second Mover Advantages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 649-53, October.
- Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
When requesting a correction, please mention this item's handle: RePEc:kud:kuiedp:8909. 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: (Thomas Hoffmann)
If references are entirely missing, you can add them using this form.