Winner-take-all price competition

This paper examines the competitiveness of winner-take-all price competition in homogeneous product oligopoly environments where underlying buyer demands and/or firms’ costs need not be continuous. Our analysis is motivated by the observation that a variety of economic settings have these features. For example, in 1996 an Ivy League university solicited bids from several vendors for its initiative to dramatically expand and standardize desktop computer use throughout the university. The extent of this standardization effort at the staff level depended on the unit price of the lowest bid received. In particular, should the price per unit prove too high, then only faculty and administrators would be included in the initiative. If bids were low enough, the initiative would be expanded to cover