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Time Consistency in Games of Timing

Author

Listed:
  • Luca Lambertini

    (University of Bologna)

Abstract

This paper tackles the issue of choosing roles in duopoly games. First, it is shown that the two necessary (and sufficient, if both satisfied) conditions for sequential play to emerge at equilibrium are that both leader and follower are at least weakly better off than under simultaneous play. Second, by means of a two-stage game of vertical differentation, it is shown that if firms can commit to their respective timing decisions, there may exist a case where the leader is not necessarily better off than the simultaneous equilibrium. Finally, in the absence of any commitment devices, it is proved that the timing choice can be time inconsistent if it is taken before firms proceed to play in both stages taking place in real time.

Suggested Citation

  • Luca Lambertini, 1997. "Time Consistency in Games of Timing," Discussion Papers 97-10, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:9710
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    Cited by:

    1. Giulio ECCHIA & Luca LAMBERTINI, 2001. "Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly," Discussion Papers (REL - Recherches Economiques de Louvain) 2001021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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    Keywords

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    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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