Production in advance versus production to order: Equilibrium and social surplus

Tasnádi, Attila (2019) Production in advance versus production to order: Equilibrium and social surplus. Working Paper. Corvinus University of Budapest Faculty of Economics, Budapest.

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We determine a symmetric mixed-strategy equilibrium of the production-in-advance type symmetric capacity-constrained Bertrand-Edgeworth duopoly game for the most challenging case of intermediate capacities, which was unknown so far. Based on the obtained equilibrium we show that economic surplus within the production-to-order type environment is higher than in the respective production-in-advance type one, and therefore production-to-order should be preferred to production-in-advance if the mode of production can be influenced by the government.

Item Type:Monograph (Working Paper)
Series Name:Corvinus Economics Working Papers - CEWP
Series Number / Identification Number:2019/06
Uncontrolled Keywords:Price-quantity games, Bertrand-Edgeworth competition
JEL classification:D43 - Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
L13 - Oligopoly and Other Imperfect Markets
Subjects:Mathematics, Econometrics
Funders:Pallas Athéné Domus Sapientiae Foundation Leading Researcher Program
ID Code:4111
Deposited By: Ádám Hoffmann
Deposited On:11 Jun 2019 13:53
Last Modified:12 Jun 2019 07:04

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