we model a real-world case problem as a price competition model between two leader-follower supply chains that each of them consists of one manufacturer and one retailer. t he manufacturer produces partially differentiated products and sells to market through his retailer. the retailer sells the products of manufacturer to market by adding some values to the product and gains margin as a fracti...

A potential source of instability of many economic models is that agents have little incentive to stick with the equilibrium. We show experimentally that this may matter with price competition. The control variable is a price floor, which increases the cost of deviating from equilibrium. Theoretically the floor allows competitors to obtain higher profits, as low prices are excluded. However, be...

In perfect competition, there is a sense in which no supplier makes any purposeful, meaningful decision regarding the price that it sets. Rather, because of perfect substitutability between all products (recall the assumption of homogenous goods in a perfectly-competitive market), firms are all price-takers. A view of firms as price-takers is incompatible with the notion that we would now like ...

Critics of health care reform proposals that incorporate managed competition contend that it has never been broadly implemented. However, insurance plans that combine insurance with the provision of care have been widely implemented and have been tested most extensively in California. This DataWatch explores California’s experience with health maintenance organizations (HMOs) and preferred prov...

We study the efficiency of oligopoly equilibria in a model where firms compete over capacities and prices. Our model economy corresponds to a two-stage game. First, firms choose their capacity levels. Second, after the capacity levels are observed, they set prices. Given the capacities and prices, consumers allocate their demands across the firms. We establish the existence of pure strategy oli...

We investigate how price ceilings and floors affect outcomes in continuous time, double auction markets with discrete goods and multiple qualities. When price controls exist, the existence of competitive equilibria (the solution concept of classical market theory) is no longer guaranteed; hence, we investigate the nature of non-price competition and how markets might evolve in its presence. We ...