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Rational Rationing in Stackelerbg Equilibria

Author

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  • Boyer, M.
  • Moreaux, M.

Abstract

In the Contect of Duopoly Theory with Differentiated Products, Economic Theorists Usually Consider the Price As the Choice Variable for the Firms. Given the Prices, the Respective Quantities Demanded and Profits Can Be Computed. in This Paper, We Consider Strategy Spaces Consisting of Both Price and Production Variables. Two Models Are Developped: in One Model, the Firm Will Choose Its Price and the Number of Consumers It Will Serve (A Serving Capacity) While, in the Other Model, It Will Choose the Price and the Total Quantity It Will Produce (A Production Capacity). We Are Particularly Concerned in This Paper with the Existence of Endogenously-Determined Rationing in a Leader-Follower Duopoly Framework. We Show That Rationing Is Always (May Be) Present in Equilibrium When Strategies Are Expressed in Terms of the Price and the Production (Serving) Capacity. Moreover, Only the Leader Or First-Mover Will Or May Engage in Rationing. Rationing Appears Therefore As a Strategic Variable. What May Appear As a Fixed Price Equilibrium Or a Disequilibrium Turns Out in This Case to Be a Strategic Equilibrium with Completely Flexible Prices. an Example Is Worked Out.

Suggested Citation

  • Boyer, M. & Moreaux, M., 1986. "Rational Rationing in Stackelerbg Equilibria," Cahiers de recherche 8631, Universite de Montreal, Departement de sciences economiques.
    • Handle: RePEc:mtl:montde:8631
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    Cited by:

    1. Yousefimanesh, Niloofar & Bos, Iwan & Vermeulen, Dries, 2023. "Strategic rationing in Stackelberg games," Games and Economic Behavior, Elsevier, vol. 140(C), pages 529-555.
    2. Emmanuel Dechenaux & Dan Kovenock, 2011. "Endogenous rationing, price dispersion and collusion in capacity constrained supergames," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(1), pages 29-74, May.
    3. Boyer, Marcel & Lasserre, Pierre & Moreaux, Michel, 2012. "A dynamic duopoly investment game without commitment under uncertain market expansion," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 663-681.
    4. Boyer, Marcel & Moreaux, Michel, 1989. "Rationnement endogène et structure de marché," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(1), pages 119-145, mars.
    5. Bos, Iwan & Vermeulen, Dries, 2021. "On pure-strategy Nash equilibria in price–quantity games," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    6. Bos, Iwan & Vermeulen, Dries, 2021. "Equilibrium existence with spillover demand," Economics Letters, Elsevier, vol. 208(C).
    7. Hyytinen, Ari & Väänänen, Lotta, 2004. "Could Mr. and Mrs. Capital Market Imperfection Please Step Forward? An Empirical Analysis of Adverse Selection and Moral Hazard in Capital Markets," Discussion Papers 887, The Research Institute of the Finnish Economy.
    8. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2001. "Preemption and Rent Dissipation under Bertrand Competition," Cahiers de recherche du Département des sciences économiques, UQAM 20-04, Université du Québec à Montréal, Département des sciences économiques.
    9. Enrico Pennings, 2001. "Price or quantity setting under uncertain demand and capacity constraints: An examination of the profits," Journal of Economics, Springer, vol. 74(2), pages 157-171, June.
    10. Shakun Datta Mago & Emmanuel Dechenaux, 2009. "Price leadership and firm size asymmetry: an experimental analysis," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 289-317, September.
    11. Heywood, John S. & Li, Dongyang & Ye, Guangliang, 2023. "Private provision of price excludable public goods by rivals," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 291-307.
    12. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2000. "Preemption and Rent Dissipation with Multiple Investments," CIRANO Working Papers 2000s-06, CIRANO.

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