Duopolistic Price Competition with Captives

Duopolistic competition under risk aversion and uncertainty

A monopolist typically defers entry into an industry as both price uncertainty and the level of relative risk aversion increase. The former attribute may be present in most deregulated industries, while the latter may be relevant for reasons of market incompleteness or the presence of technical uncertainty. By contrast, it has been shown that the presence of a rival hastens entry under risk neu...

Stochastic Switching Games and Duopolistic Competition in Emissions Markets

We study optimal behavior of energy producers under a CO2 emission abatement program. We focus on a two-player discrete-time model where each producer is sequentially optimizing her emission and production schedules. The game-theoretic aspect is captured through a reducedform price-impact model for the CO2 allowance price. Such duopolistic competition results in a new type of a non-zero-sum sto...

Duopolistic Competition, Taxes, and the Arm’s-Length Principle∗

Numerous (high-tax) countries presume that multinational firms use their transferpricing policies to shift profits into countries with lower tax rates. To avoid the corresponding loss in tax revenues, tax authorities develop constantly tightening rules to curb transfer-price distortions. Affected firms include the decision of compliance to these rules into their strategic considerations. In a s...

Duopolistic Competition in Cable Television: Implications for Public Policy

Price competition with elastic traffic

In this paper, we present a combined study of price competition and traffic control in a congested network. We study a model in which service providers own the routes in a network and set prices to maximize their profits, while users choose the amount of flow to send and the routing of the flow according to Wardrop’s principle. When utility functions of users are concave and have concave first ...