Regulating Availability with Demand Uncertainty

Regulating Availability with Demand Uncertainty

I evaluate German regulation that requires retail discounters to guarantee the availability of their products in bargain sales. The regulation is meant to prevent loss leaders. Retailers however claim that rationing is due to demand uncertainty and thereby undermine the regulation’s rationale. Indeed, demand uncertainty explains empirical observations better than a theory of loss leaders. This ...

Endogenous Timing with Demand Uncertainty

Structural Demand Estimation with Varying Product Availability

Demand estimation based on discrete choice theory has become an important tool in Marketing and empirical Industrial Organization. In particular, estimation techniques have been developed that allow the use of individual-based discrete choice methods in situations where only aggregate data are available (e.g. Berry et al. 1995). In essence, these methods allow making inferences on the distribut...

Partial Communication and Collusion with Demand Uncertainty

This paper analyzes the role of communication between firms in an infinitely repeated Bertrand game in which firms receive an imperfect private signal of a common value i.i.d. demand shock. Communication allows firms to coordinate on the most collusive price and it eliminates the possibility of undetectable price cuts. It is shown that firms can use stochastic intertemporal market sharing as a ...

Large market games with demand uncertainty

We consider a market game with a continuum of consumers, where the measure of each type is stochastic. Nature selects the set of active consumers, who make bids and o¤ers on ` ¡ 1 spot market trading posts. Existence of type-symmetric Nash equilibrium is proven. When facing price uncertainty, best responses are unique, and a Nash equilibrium to the sell-all game is typically not a Nash equilibr...