Endogenous Timing of Moves in Bertrand-Edgeworth Triopolies

Tasnádi, Attila (2012) Endogenous Timing of Moves in Bertrand-Edgeworth Triopolies. Working Paper. MTA-BCE "Lendület" Strategic Interactions Research Group. (Unpublished)

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We determine the endogenous order of moves in which the firms set their prices in the framework of a capacity-constrained Bertrand-Edgeworth triopoly. A three-period timing game that determines the period in which the firms announce their prices precedes the price-setting stage. We show for the non-trivial case (in which the Bertrand-Edgeworth triopoly has only an equilibrium in non-degenerated mixed-strategies) that the firm with the largest capacity sets its price first, while the two other firms set their prices later. Our result extends a finding by Deneckere and Kovenock (1992) from duopolies to triopolies. This extension was made possible by Hirata's (2009) recent advancements on the mixed-strategy equilibria of Bertrand-Edgeworth games.

Item Type:Monograph (Working Paper)
Uncontrolled Keywords:Bertrand-Edgeworth, price leadership, oligopoly, timing games
JEL classification:D43 - Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
L13 - Oligopoly and Other Imperfect Markets
Funders:Hungarian Scientific Research Fund (OTKA K-101224)
Projects:MTA-BCE "Lendület" Strategic Interactions Research Group
ID Code:1269
Deposited By: Attila Tasnádi
Deposited On:21 Jun 2013 11:10
Last Modified:14 Apr 2015 11:18

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