Multilateral limit pricing in price-setting games

• 成果类型: Article
• 署名作者: Cumbul, Eray; Virag, Gabor
• 署名单位: TOBB Ekonomi ve Teknoloji University; University of Toronto
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2018.06.008
• 发表日期: 2018
• 页码: 250-273
• 关键词: Bertrand; supermodularity; Market entry and exit; Limit pricing; Stackelberg

摘要

In this paper, we characterize the set of pure strategy undominated equilibria in differentiated Bertrand oligopolies with linear demand and constant unit costs when firms may prefer not to produce. When all firms are active, there is a unique equilibrium. However, there is a continuum of non-equivalent Bertrand equilibria on a wide range of parameter values when the number of firms (n) is more than two and n* is an element of [2, n - 1] firms are active. In each such equilibrium, the firms that are relatively more cost or quality efficient limit their prices to induce the exit of their rival(s). When n >= 3, this game does not need to satisfy supermodularity, the single-crossing property, or log-supermodularity. Moreover, the best responses might have negative slopes. Our main results extend to a Stackelberg entry game where some established incumbents first set their prices, and then a potential entrant sets its price. (C) 2018 Elsevier Inc. All rights reserved.