Sequential capacity and price choices in a duopoly model with demand uncertainty
type: Item
instance of: scholarly article
title: Sequential capacity and price choices in a duopoly model with demand uncertainty
zbMATH Open document ID: 0695.90012
DOI: 10.1007/BF01227598
author: Morten Hviid
published in: Journal of Economics
publication date: 1990-01-01T00:00:00Z
review text: The paper analyses the effect of demand uncertainty in a two-stage duopoly model where firms first choose capacity, then price and shows that the equilibrium is sensitive to the decision structure of the model. If both the capacity choice and the price choice are made simultaneously no pure strategy equilibrium exists. If prices are chosen sequentially, the pricing stage has two pure strategy equilibria, but only for one of these does a pure strategy equilibrium of the full game exist. Finally, if both capacities and prices are chosen sequentially, a pure strategy equilibrium with strong first mover advantages exists.
Mathematics Subject Classification ID: 91B24
Mathematics Subject Classification ID: 91A40
Mathematics Subject Classification ID: 91B50
zbMATH DE Number: 4139435
zbMATH Keywords: demand uncertainty
zbMATH Keywords: two-stage duopoly model
zbMATH Keywords: pure strategy equilibrium
MaRDI profile type: Publication
cites work: The Existence of Equilibrium in Discontinuous Economic Games, I: Theory
cites work: The existence of mixed-strategy equilibria in a price-setting oligopoly with convex costs
cites work: First Mover and Second Mover Advantages
cites work: Equilibrium in simple spatial (or differentiated product) models
cites work: Price competition in a capacity-constrained duopoly
description: scientific article; zbMATH DE number 4139435