Dynamic limit pricing

• 成果类型: Article
• 署名作者: Toxvaerd, Flavio
• 署名单位: University of Cambridge
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• 发表日期: 2017
• 页码: 281-306
• 关键词: Incomplete information; entry; threat; uncertain; airlines

摘要

I study a multiperiod model of limit pricing under one-sided incomplete information. I characterize pooling and separating equilibria and their existence and determine when these involve limit pricing. For some parameter constellations, the unique equilibrium surviving a D1 type refinement involves immediate separation on monopoly prices. For others, there are limit price equilibria surviving the refinement in which different types may initially pool and then (possibly) separate. Separation involves setting prices such that the inefficient incumbent's profits from mimicking are negative. As the horizon increases or as firms become more patient, limit pricing becomes increasingly difficult to sustain in equilibrium.