Myopic Oligopoly Pricing

Iwan Bos, Marco Marini and Riccardo Saulle ()

No 310282, FEEM Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: This paper examines capacity-constrained oligopoly pricing with sellers who seek myopic improvements. We employ the Myopic Stable Set stability concept and establish the existence of a unique pure-strategy price solution for any given level of capacity. This solution is shown to coincide with the set of pure-strategy Nash equilibria when capacities are large or small. For an intermediate range of capacities, it predicts a price interval that includes the mixed-strategy support. This stability concept thus encompasses all Nash equilibria and offers a pure-strategy solution when there is none in Nash terms. In particular, it provides a behavioral rationale for different types of pricing dynamics, including real-world economic phenomena such as Edgeworth-like price cycles, price dispersion and supply shortages.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 50
Date: 2021-04-01
New Economics Papers: this item is included in nep-com, nep-cwa, nep-gth and nep-ind
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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https://ageconsearch.umn.edu/record/310282/files/NDL2021-009.pdf (application/pdf)

Related works:
Journal Article: Myopic oligopoly pricing (2024)
Working Paper: Myopic Oligopoly Pricing (2021)
Working Paper: Myopic Oligopoly Pricing (2021)
Working Paper: Myopic Oligopoly Pricing (2021)
Working Paper: Myopic Oligopoly Pricing (2021)
Working Paper: Myopic Oligopoly Pricing (2021)
Working Paper: Myopic Oligopoly Pricing (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemwp:310282

DOI: 10.22004/ag.econ.310282

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