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List pricing and pure strategy outcomes in a Bertrand-Edgeworth duopoly

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorGarcía Díaz, Antón
dc.contributor.authorKujal, Praveen
dc.date.accessioned2006-11-09T11:26:46Z
dc.date.available2006-11-09T11:26:46Z
dc.date.issued2003-10
dc.description.abstractNon-existence of a pure strategy equilibrium in a Bertrand-Edgeworth duopoly model is analyzed. The standard model is modified to include a list pricing stage and a subsequent price discounting stage. Both firms first simultaneously choose a maximum list price and then decide to lower the price, or not, in a subsequent discounting stage. List pricing works as a credible commitment device that induces the pure strategy outcome. It is shown that for a general class of rationing rules there exists a sub-game perfect equilibrium that involves both firms playing pure strategies. This equilibrium payoff dominates any other sub-game perfect equilibrium of the game. Further unlike the dominant firm interpretation of a price leader, we show that the small firm may have incentives to commit to a low price and in this sense assume the role of a leader.
dc.format.extent509643 bytes
dc.format.mimetypeapplication/pdf
dc.identifier.issn2340-5031
dc.identifier.repecwe034918
dc.identifier.urihttps://hdl.handle.net/10016/300
dc.language.isoeng
dc.relation.ispartofseriesUC3M Working Paper. Economics
dc.relation.ispartofseries2003-18
dc.rights.accessRightsopen access
dc.subject.ecienciaEconomía
dc.titleList pricing and pure strategy outcomes in a Bertrand-Edgeworth duopoly
dc.typeworking paper*
dspace.entity.typePublication
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