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On uncertainty when it affects successive markets


  • Jean Gabszewicz
  • Ornella Tarola
  • Skerdilajda Zanaj

    () (CREA, University of Luxembourg)


In this paper, we examine how uncertainty can affect successive mar- kets, when uncertainty can jointly influence both the upstream and down- stream markets conditions. The main result of the paper is that the equi- librium input and output quantities under stochastic dependence can be higher or lower than the corresponding quantities in the case of certainty equivalence depending on how much dependent are the events.

Suggested Citation

  • Jean Gabszewicz & Ornella Tarola & Skerdilajda Zanaj, 2009. "On uncertainty when it affects successive markets," CREA Discussion Paper Series 09-13, Center for Research in Economic Analysis, University of Luxembourg.
  • Handle: RePEc:luc:wpaper:09-13

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    References listed on IDEAS

    1. Jean J. Gabszewicz & Sougata Poddar, 1997. "Demand fluctuations and capacity utilization under duopoly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(1), pages 131-146.
    2. Géarard Gaudet & Ngo Long, 1996. "Vertical Integration, Foreclosure, and profits in the Presence of Double Marginalization," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 409-432, September.
    3. Leland, Hayne E, 1972. "Theory of the Firm Facing Uncertain Demand," American Economic Review, American Economic Association, vol. 62(3), pages 278-291, June.
    4. Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, Oxford University Press, vol. 103(2), pages 345-356.
    5. Eric S. Maskin, 1999. "Uncertainty and entry deterrence," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(2), pages 429-437.
    6. Veronika Grimm & Gregor Zoettl, 2006. "Capacity Choice under Uncertainty: The Impact of Market Structure," Working Paper Series in Economics 23, University of Cologne, Department of Economics.
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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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