Can Producers’ Price War End Up in an Optimal Allocation?

Abstract

The paper presents a theoretical framework for the phenomenon of the price war in the context of general equilibrium, with special attention to the production system. The natural question that arises is whether Nash-optimal production plans being the reactions to the changing prices can finally approximate a Nash-optimal production plan at the end of this war. To provide an answer, the production system is described as a parametric-multicriteria game. Referring to some results on the lower semicontinuty of the parametric weak-multicriteria Nash equilibria, we provide a positive answer for the stated problem.

Research on Price War of Payment Platform based on Repeated Game-Taking Alipay and Wechat as Examples

“…On the other hand, Cardot and Boland rationally analyze the motivations that lead to price wars among well-educated price-setters through a more individual-specific perspective, learning that even though they all share a strong desire to avoid price wars, they often attribute aggressive pricing actions to competitors and that price-setters modify the definition of price wars in order to ensure that their behavior does not appear to constitute a price war [4]. Marta presents a theoretical framework of the price war phenomenon from a general equilibrium perspective, especially focusing on the production system, and explores whether its Nashoptimal production plan can eventually approximate a Nash-optimal production plan at the end of this war in response to changing price responses [5].…”