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

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Mostrar el registro sencillo del ítem García Díaz, Antón Kujal, Praveen 2006-11-09T11:26:46Z 2006-11-09T11:26:46Z 2003-10
dc.identifier.issn 2340-5031
dc.description.abstract Non-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.extent 509643 bytes
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries UC3M Working Paper. Economics
dc.relation.ispartofseries 2003-18
dc.title List pricing and pure strategy outcomes in a Bertrand-Edgeworth duopoly
dc.type workingPaper
dc.subject.eciencia Economía
dc.rights.accessRights openAccess
dc.identifier.repec we034918
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