Price Competition with Capacity Constraint and Imperfect Information

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216224%3A14560%2F12%3A00060940" target="_blank" >RIV/00216224:14560/12:00060940 - isvavai.cz</a>
Result on the web
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DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Price Competition with Capacity Constraint and Imperfect Information
Original language description
Kreps-Sheinkman model introduces a capacity choice into the model of price competition. It shows that in the context of a one-shot game, the environment in which oligopolists make capacity decisions and then post prices for their products has the same Nash equilibrium as the environment in which oligopolists make output decisions and sell their output at market clearing prices. The aim of this paper is to investigate the robustness of this claim. I consider the two-stage game where firms make capacity decision rst and then compete in prices subject to their supply limits. Contrary to Kreps and Sheinkman, I assume that firms have imperfect information about their rival's capacity choice. I show that in this case the Cournot equilibrium conclusion does not hold, because the model has no pure strategy equilibrium. Moreover, the mixed strategy equilibrium has a surprising property. Expected market price increases when there are more firms in the market.
Czech name
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Czech description
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Publication year
2012
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
Proceedings of 30th International Conference Mathematical Methods in Economics
ISBN
9788072487790
ISSN
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e-ISSN
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Number of pages
6
Pages from-to
830-835
Publisher name
Silesian University, School of Business Administration
Place of publication
Karviná
Event location
Karviná
Event date
Sep 11, 2012
Type of event by nationality
EUR - Evropská akce
UT code for WoS article
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