A Theory of Dynamic Oligopoly, I: Overview and Quantity Competition with Large Fixed Costs

"^-^^-^-^ Overview and Quantity Competition with Large Fixed Costs

A THEORY OF DYNAMIC OLIGOPOLY, III Cournot Competition

We study the Markov perfect equilibrium (MPE) of an alternating move, infinite horizon duopoly model where the strategic variable is quantity. We exhibit a pair of differencedifferential equations that, when they exist, differentiable MPE strategies satisfy. For quadratic payoff functions, we solve these equations in closed form and demonstrate that the MPE corresponding to the solution is the ...

A Dynamic Network Oligopoly Model with Transportation Costs, Product Differentiation, and Quality Competition

This paper develops a new dynamic model of Cournot-Nash oligopolistic competition that includes production and transportation costs, product differentiation, and quality levels in a network framework. The production costs capture the total quality cost, which, in turn, can also represent the R&D cost. We first present the equilibrium version and derive alternative variational inequality formula...

Oligopoly Competition in Fixed Cost Environments

Many industries with avoidable fixed costs face competitive price instability problems in an attempt to maintain profitability. We designed an experimental environment where profitability is eroded by the addition of sunk and avoidable fixed costs. While we cannot reject the hypothesis that sunk fixed costs have no effect on prices, we observe a pattern of price signaling and responses which ma...

Bertrand competition in markets with fixed costs

This paper provides necessary and sufficient conditions for the existence of a pure strategy Bertrand equilibrium in a model of price competition with fixed costs. It unveils an interesting and unexplored relationship between Bertrand competition and natural monopoly. That relationship points out that the non-subadditivity of the cost function at the output level corresponding to the oligopoly ...