De Francesco, Massimo A. and Salvadori, Neri (2008): Bertrand-Edgeworth games under oligopoly with a complete characterization for the triopoly.
Download (272kB) | Preview
The paper extends the analysis of price competition among capacity-constrained sellers beyond the cases of duopoly and symmetric oligopoly. We first provide some general results for the oligopoly and then focus on the triopoly, providing a complete characterization of the mixed strategy equilibrium of the price game. The region of the capacity space where the equilibrium is mixed is partitioned according to the features of the mixed strategy equilibrium arising in each subregion. Then computing the mixed strategy equilibrium becomes a quite simple task. The analysis reveals features of the mixed strategy equilibrium which do not arise in the duopoly (some of them have also been discovered by Hirata (2008)).
|Item Type:||MPRA Paper|
|Original Title:||Bertrand-Edgeworth games under oligopoly with a complete characterization for the triopoly|
|Keywords:||Bertrand-Edgeworth; Price game; Oligopoly; Triopoly; Mixed strategy equilibrium|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
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
|Depositing User:||Neri Salvadori|
|Date Deposited:||11. May 2008 01:10|
|Last Modified:||03. Mar 2013 09:31|
Boccard, N., Wauthy, X. (2000), Bertrand competition and Cournot outcomes: further results, Economics Letters, 68, 279-285.
Dasgupta, P., E. Maskin (1986), The existence of equilibria in discontinuous economic games I:\ Theory, Review of Economic Studies, 53, 1-26.
De Francesco, M. A. (2003), On a property of mixed strategy equilibria of the pricing game, Economics Bulletin, 4, 1-7.
Deneckere, R. J., Kovenock D. (1996), Bertrand-Edgeworth duopoly with unit cost asymmetry, Economic Theory, 1-25.
Hirata, D. (2008), Bertrand-Edgeworth equilibrium in oligopoly, Munich Personal RePec Archive, March.
Levitan, R., M. Shubik (1972), Price duopoly and capacity constraints, International Economic Review, 13, 111-122.
Loertscher, S. (2008), Market making oligopoly, The Journal of Industrial Economics, forthcoming.
Osborne, M. J., C. Pitchik (1986), Price competition in a capacity-constrained duopoly, Journal of Economic Theory, 38, 238-260.
Kreps, D., J. Sheinkman (1983), Quantity precommitment and Bertrand competition yields Cournot outcomes, Bell Journal of Economics, 14, 326-337.
Vives, X. (1986), Rationing rules and Bertrand-Edgeworth equilibria in large markets, Economics Letters 21, 113-116.