A general model of oligopoly endogenizing Cournot, Bertrand, Stackelberg, and Allaz-Vila

Breitmoser, Yves (2010): A general model of oligopoly endogenizing Cournot, Bertrand, Stackelberg, and Allaz-Vila.

Abstract

This paper analyzes a T-stage model of oligopoly where firms build up capacity and conclude forward sales in stages t<T, and they choose production quantities in t=T. We consider the case of n firms with asymmetric marginal costs. In the two-stage game, the set of outcomes is a quasi-hyperrectangle including Cournot, Allaz-Vila, and all two-stage Stackelberg outcomes. In general, it consists of T-1 such hyperrectangles where the lower bound approaches the Bertrand outcome as T tends to infinity. In the limit, a range of outcomes stretching from Cournot via Stackelberg to Bertrand can result in equilibrium, i.e. the mode of competition is entirely endogenous.

• Item Type: MPRA Paper
• Language: English
• Keywords: forward sales, capacity precommitment, Cournot, Stackelberg, Bertrand
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games

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