Dynamic price competition with capacity constraints and strategic buyers
We analyze a dynamic durable good oligopoly model where sellers are capacity constrained over the length of the game. Buyers act strategically in the market, knowing that their purchases may affect future prices. The model is examined when there is one and multiple buyers. Sellers choose their capacities at the start of the game. We find that there are only mixed strategy equilibria. Buyers may split orders, preferring to buy a unit from both high and low price sellers to buying all units from the low price seller. Sellers enjoy a rent above the amount needed to satisfy the market demand that the other seller cannot meet. Buyers would like to commit not to buy in the future or hire agents with instructions to always buy from the lowest priced seller. Further, sellers’ market shares tend to be asymmetric with high probability, even though they are ex ante identical.
|Date of creation:||Jun 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (351) 21 790 20 00
Fax: (351) 21 790 20 99
Web page: http://www.autoridadedaconcorrencia.pt/Email:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:pca:wpaper:24. 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: (Duarte Brito)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.