Price competition in a capacity-constrained duopoly
type: Item
instance of: scholarly article
title: Price competition in a capacity-constrained duopoly
zbMATH Open document ID: 0603.90023
DOI: 10.1016/0022-0531(86)90117-1
author: Martin J. Osborne
author: Carolyn Pitchik
published in: Journal of Economic Theory
publication date: 1986-01-01T00:00:00Z
review text: This paper characterizes the set of Nash equilibria in a model of price- setting duopoly in which each firm has limited capacity, and demand is continuous and decreasing. In general there is a unique equilibrium, so that comparative static exercises are meaningful. The properties of the equilibrium conform with a number of stylized facts. The equilibrium prices are lower, the smaller is demand relative to capacity. When demand is in an intermediate range, the firms used mixed strategies - they randomly hold ''sales''. If capacities are chosen simultaneously, before prices, the set of equilibrium capacities coincides with the set of Cournot quantities.
Mathematics Subject Classification ID: 91B24
zbMATH DE Number: 3974658
zbMATH Keywords: set of Nash equilibria
zbMATH Keywords: price-setting duopoly
zbMATH Keywords: limited capacity
MaRDI profile type: Publication
full work available at URL: 0022-0531(86)90117-1
OpenAlex ID: W1984106325
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description: scientific article; zbMATH DE number 3974658