Price and Non-Price Competition in Oligopoly - An Analysis of Relative Payoff Maximizers PDF Download

Author: Hamed M. Moghadam
Publisher:
ISBN: 9783867886642
Category :
Languages : en
Pages : 23

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Author: Xavier Vives
Publisher: MIT Press (MA)
ISBN: 9780262220606
Category : Business & Economics
Languages : en
Pages : 446

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Book Description
Applies a modern game-theoretic approach to develop a theory of oligopoly pricing. The text relates classic contributions to the field of modern game theory and discusses basic game-theoretic tools and equilibrium, paying particular attention to developments in the theory of supermodular games.

Author: Robert E. Kuenne
Publisher: Springer
ISBN: 0230503713
Category : Business & Economics
Languages : en
Pages : 442

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Book Description
The theory of price and quality decision-making in industries with a few firms which recognize their mutual interdependence is of increasing interest to economists and policy makers. This book introduces a novel theory of that decision-making, based upon the notion of the industry as a community of agents who are involved in both competitive and cooperative relationships. It develops theories and illustrates methodological approaches to the analysis of price and quality decision-making in such instances of a 'rivalrous consonance of interests' among firms.

Author: Hamed Markazi Moghadam
Publisher:
ISBN:
Category :
Languages : en
Pages : 22

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The article proposes an evolutionary game theoretical analysis of quality and price competition in oligopoly. Using the notion of a finite population evolutionarily stable strategy (FPESS) defined by Schaffer (1989), the relative payoff maximizing behavior is compared with the absolute payoff maximizing behavior. In the literature of IO on quality competition, two different assumptions are made about the nature of cost function. First, firms produce quality mostly with fixed costs and second, quality is produced by variable costs. Therefore, in the context of a symmetric oligopoly game where each firm has two dimensional strategy set of price and quality, the present paper attempts to answer a question regarding the equivalence of FPESS and Nash equilibrium. In conclusion, whether firms produce quality with fixed costs or variable costs, our results show that Nash equilibrium, FPESS and competitive equilibrium are distinct. Moreover, this paper provide a generalization of evolutionary game setup of Tanaka (2000) where we obtain not the same equilibrium price comparison between Nash and FPESS from the one that attained in Tanaka (2000, proposition 2).

Author: Shyh-Fang Ueng
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 118

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Book Description
This research investigates three issues related to the economic performance of oligopolistic markets where firms produce differentiated products and compete in prices. First of all, this dissertation uses a Markov Perfect Equilibrium approach with fixed periods of commitment of actions to answer the question of what prices a duopolists will charge in equilibrium if they produce horizontally differentiated products, move alternatingly, and compete in prices forever. It is found that firms charge prices which are higher than Nash equilibrium prices but lower than the fully collusive equilibrium prices. Also, contrasted with the Nash equilibrium of the one-shot constituent game, the firm having the significantly higher demand responsiveness to its own price always charges a lower price than the other firm does although it has higher marginal cost. The dissertation then proceeds to study whether a firm can overcome its cost disadvantage by upgrading its product over the rival's, and if so, whether there exists a profit-division which will induce the low cost firm and the high cost firm to collude and no one has an incentive to cheat. The results show that (1) the ability of upgrading the product over the rival's can allow a high cost firm to earn higher profit than a cost advantaged low cost firm; (2) there exists at least one profit-division which can sustain full collusion; and (3) in the collusive equilibrium firms enlarge their quality differences to alleviate the price tension between their products. Finally, this work investigates the welfare effect of mergers which occur in an oligopolistic industry where firms produce differentiated products. It is shown that for the merger to be socially beneficial, the number of the merging firms must be less than the total number of firms in the industry minus the ratio of the products' own elasticity to cross elasticity. The analysis indicates that the welfare effect of a merger of a specific size depends on the substitutability among products of the industry.

Author: James Friedman
Publisher: CUP Archive
ISBN: 9780521282444
Category : Business & Economics
Languages : en
Pages : 262

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Book Description
James Friedman provides a thorough survey of oligopoly theory using numerical examples and careful verbal explanations to make the ideas clear and accessible. While the earlier ideas of Cournot, Hotelling, and Chamberlin are presented, the larger part of the book is devoted to the modern work on oligopoly that has resulted from the application of dynamic techniques and game theory to this area of economics. The book begins with static oligopoly theory. Cournot's model and its more recent elaborations are covered in the first substantive chapter. Then the Chamberlinian analysis of product differentiation, spatial competition, and characteristics space is set out. The subsequent chapters on modern work deal with reaction functions, advertising, oligopoly with capital, entry, and oligopoly using noncooperative game theory. A large bibliography is provided.

Author: Robert E. Kuenne
Publisher: Wiley-Blackwell
ISBN: 9781557863010
Category : Business & Economics
Languages : en
Pages : 492

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Book Description
Professor Kuenne is a leading authority in the field of economic theory, having made significant contributions to the fields of general equilibrium theory, industrial organization and regional science. This volume focuses on the development and exposition of a new theory of oligopoly which is asserted to have certain advantages over game theoretic approaches. It is designed to be opertional, to be capable of fitting within general equilibrium frameworks, to permit multiobjective optimization by firms, and to be soluble by nonlinear programming techniques. Most importantly, Professor Kuenne develops themes concerning the need to incorporate within oligopoly a blending of the cooperative and competitive that typifies the price strategies of oligopolists within most industries with small numbers of competitors. Unlike game theory, this approach permits analysis of the peculiar socioeconomic power structure that develops within oligopolies and constrains members′ decision-making freedom. This power structure can be derived exogenously or endogenously in the modelling. The theory is developed fully with extensive empirical application, particularly to decision making within the OPEC petroleum cartel in the 1970s.

Author: William John 1905- Fellner
Publisher: Hassell Street Press
ISBN: 9781015210752
Category :
Languages : en
Pages : 360

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Book Description
This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. To ensure a quality reading experience, this work has been proofread and republished using a format that seamlessly blends the original graphical elements with text in an easy-to-read typeface. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.

Author: Richard B. McKenzie
Publisher: University of Michigan Press
ISBN: 0472901141
Category : Business & Economics
Languages : en
Pages : 554

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Book Description
In Defense of Monopoly offers an unconventional but empirically grounded argument in favor of market monopolies. Authors McKenzie and Lee claim that conventional, static models exaggerate the harm done by real-world monopolies, and they show why some degree of monopoly presence is necessary to maximize the improvement of human welfare over time. Inspired by Joseph Schumpeter's suggestion that market imperfections can drive an economy's long-term progress, In Defense of Monopoly defies conventional assumptions to show readers why an economic system's failure to efficiently allocate its resources is actually a necessary precondition for maximizing the system's long-term performance: the perfectly fluid, competitive economy idealized by most economists is decidedly inferior to one characterized by market entry and exit restrictions or costs. An economy is not a board game in which players compete for a limited number of properties, nor is it much like the kind of blackboard games that economists use to develop their monopoly models. As McKenzie and Lee demonstrate, the creation of goods and services in the real world requires not only competition but the prospect of gains beyond a normal competitive rate of return.

Author: Victor J. Tremblay
Publisher: Springer Science & Business Media
ISBN: 1461432413
Category : Business & Economics
Languages : en
Pages : 820

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Book Description
This book covers the main topics that students need to learn in a course on Industrial Organization. It reviews the classic models and important empirical evidence related to the field. However, it will differ from prior textbooks in two ways. First, this book incorporates contributions from behavioral economics and neuroeconomics, providing the reader with a richer understanding of consumer preferences and the motivation for many of the business practices we see today. The book discusses how firms exploit consumers who are prone to making mistakes and who suffer from cognitive dissonance, attention lapses, and bounded rationality, for example and will help explain why firms invest in persuasive advertising, offer 30-day free trials, offer money-back guarantees, and engage in other observed phenomena that cannot be explained by the traditional approaches to industrial organization. A second difference is that this book achieves a balance between textbooks that emphasize formal modeling and those that emphasize the history of the field, empirical evidence, case studies, and policy analysis. This text puts more emphasis on the micro-foundations (i.e., consumer and producer theory), classic game theoretic models, and recent contributions from behavioral economics that are pertinent to industrial organization. Each topic will begin with a discussion of relevant theory and models and will also include a discussion of concrete examples, empirical evidence, and evidence from case studies. This will provide students with a deeper understanding of firm and consumer behavior, of the factors that influence market structure and economic performance, and of policy issues involving imperfectly competitive markets. The book is intended to be a textbook for graduate students, MBAs and upper-level undergraduates and will use examples, graphical analysis, algebra, and simple calculus to explain important ideas and theories in industrial organization.