Price competition in a capacity-constrained duopoly

Osborne, Martin J.; Pitchik, Carolyn

doi:10.1016/0022-0531(86)90117-1

Cited by 239 publications

(164 citation statements)

References 7 publications

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“…6 As noted by Cripps and Ireland (1988), the homogeneous nature of the market means that if buyers are rationed at a firm, the sets of successful and unsuccessful buyers are identical. Hence, our results are valid regardless of the rationing rule, including those investigated by Davidson and Deneckere (1986), Osborne and Pitchik (1986) or Lepore (2008), among others. Our results are also independent of the tiebreaking rule.…”

Section: The Modelsupporting

confidence: 67%

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Endogenous capacities and price competition: The role of demand uncertainty

Frutos

Fabra

2011

International Journal of Industrial Organization

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We analyze the role of demand uncertainty in markets of fixed size, in which firms take long run capacity decisions prior to competing in prices. We characterize the set of subgame perfect Nash equilibria under various assumptions regarding the nature and timing of demand uncertainty. In order to prove equilibrium existence, we identify a sufficient condition for the capacity choice game to be submodular. This condition resembles the standard downward sloping marginal revenue condition used in Cournot games. A robust conclusion of the analysis is that equilibrium capacity choices are asymmetric, even when firms are ex ante identical. Concerning the equivalence between the capacity price game and the Cournot game, we find that with inelastic demands, the equilibria of the former belong to the equilibrium set of the latter. However, as compared to the Cournot game, the capacity price game leads to lower prices and generates price dispersion.

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Section: The Modelsupporting

confidence: 67%

“…Equilibrium pricing in this case was first analyzed by Cripps and Ireland (1988), 7 whose results we report next (see also Osborne and Pitchik, 1986): Proposition 1. (Cripps and Ireland (1988)) In the pricing stage, for given θ and k − ≤ k + , there is a unique equilibrium which satisfies the following:…”

Section: Pricing Stagementioning

confidence: 53%

Endogenous capacities and price competition: The role of demand uncertainty

Frutos

Fabra

2011

International Journal of Industrial Organization

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“…Several variants of the Bertrand game have also been studied, e.g., [6], [7], [8], [18]. Chawla et al [18] consider price competition in networks where each seller owns a capacityconstrained link, and decides the price for using it; the consumers choose paths they would use in the networks based on the prices declared and pay the sellers accordingly.…”

Section: Related Workmentioning

confidence: 99%

“…In addition, the link capacities are deterministic in [18], whereas the availability of bandwidth is random in our model. However, none of the above papers [6], [7], [8], [18] consider the spectrum-specific issue of spatial reuse, which introduces a new dimension, that each player not only needs to determine the price of the commodity it owns (as in [6], [7], [8], [18]), but also select an independent set to compete in. The joint decision problem significantly complicates the analysis.…”

Section: Related Workmentioning

confidence: 99%

“…A graph obtained by considering the union of disjoint mean valid graphs, all of which correspond to the same integer d, and then adding some edges to get a connected graph, is a mean valid graph under some technical conditions 6 , e.g., the cellular networks in a group of neighboring towns or the WiFi networks in the departments of a university campus. Fig.…”

Section: B Examplesmentioning

confidence: 99%

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Spectrum Pricing Games with Spatial Reuse in Cognitive Radio Networks

Kasbekar

Sarkar

2012

IEEE J. Select. Areas Commun.

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Abstract-In Cognitive Radio Networks (CRN), there are multiple primary and secondary users in a region, and primaries can lease out their unused bandwidth to secondaries in exchange for a fee. This gives rise to price competition among the primaries, wherein each primary tries to attract secondaries by setting a lower price for its bandwidth than the other primaries. Radio spectrum has the distinctive feature that transmissions at neighboring locations on the same channel interfere with each other, whereas the same channel can be used at far-off locations without mutual interference. So in the above price competition scenario in a CRN, each primary must jointly select a set of mutually non-interfering locations within the region (which corresponds to an independent set in the conflict graph representing the region) at which to offer bandwidth and the price at each location. In this paper, we analyze this price competition scenario as a game and seek a Nash Equilibrium (NE). We identify a class of conflict graphs, which we refer to as mean valid graphs, such that the conflict graphs of a large number of topologies that commonly arise in practice are mean valid. We explicitly compute a symmetric NE in mean valid graphs and show that it is unique.

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Order backlogs and strategic pricing: the case of the U.S. large turbine generator industry

Ghemawat

McGahan

1998

Strat. Mgmt. J.

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This paper illustrates the usefulness of game theory for strategic management through theoretical and empirical analysis of price competition in the presence of production backlogs. Game‐theoretic analysis predicts a different relationship between relative prices and backlog levels than does analysis that ignores the sorts of interactive considerations emphasized by game theory. Empirical analysis based on data for the U.S. market for large turbine generators between 1951 and 1963 corroborates the game‐theoretic prediction. The paper concludes with a discussion of the sorts of situations in which game‐theoretic reasoning is particularly likely to prove useful. © 1998 John Wiley & Sons, Ltd.

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Price competition in a capacity-constrained duopoly

Cited by 239 publications

References 7 publications

Endogenous capacities and price competition: The role of demand uncertainty

Endogenous capacities and price competition: The role of demand uncertainty

Spectrum Pricing Games with Spatial Reuse in Cognitive Radio Networks

Order backlogs and strategic pricing: the case of the U.S. large turbine generator industry

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