Price competition with capacity uncertainty- feasting on leftovers

• 成果类型: Article
• 署名作者: Somogyi, Robert; Vergote, Wouter; Virag, Gabor
• 署名单位: Budapest University of Technology & Economics; heSam Universite; ESCP Business School; University of Toronto; University Toronto Mississauga; University of Toronto
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2023.03.010
• 发表日期: 2023
• 页码: 253-271
• 关键词: Capacity constraint; Capacity uncertainty; Bertrand-Edgeworth competition

摘要

There is ample empirical evidence documenting that large firms set significantly lower prices than smaller, capacity-constrained, firms. This is paradoxical in light of the standard theoretical result that large firms charge higher prices than small firms in models of price competition with capacity constraints. We argue that private information about capacity constraints can account for this puzzle. We provide concavity conditions on the demand and on the type distribution under which there exists a unique, monotone decreasing price equilibrium. Solving the model requires a novel approach of studying several different regions of pricing incentives depending on the realized capacity levels. We show that firms with intermediate capacities compete in an auction type interaction, while firms with low or high capacity levels compete less vigorously on the margin.(c) 2023 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY-NC-ND license (http://creativecommons .org /licenses /by-nc -nd /4 .0/).