Please use this identifier to cite or link to this item: https://hdl.handle.net/20.500.11851/875
Title: Multilateral limit pricing in price-setting games
Authors: Cumbul, Eray
Virág, Gabor
Keywords: Stackelberg
Limit pricing
Market entry and exit
Supermodularity
Bertrand
Issue Date: 1-Sep-2018
Publisher: Academic Press Inc.
Source: Cumbul, E., & Virág, G. (2018). Multilateral limit pricing in price-setting games. Games and Economic Behavior, 111, 250-273.
Abstract: 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⁎∈[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.
URI: https://doi.org/10.1016/j.geb.2018.06.008
https://hdl.handle.net/20.500.11851/875
ISSN: 0899-8256
Appears in Collections:İktisat Bölümü / Department of Economics
Scopus İndeksli Yayınlar Koleksiyonu / Scopus Indexed Publications Collection
WoS İndeksli Yayınlar Koleksiyonu / WoS Indexed Publications Collection

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