Myopic Oligopoly Pricing

Iwan Bos, Marco Marini and Riccardo D. Saulle

No 317126, 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 solution 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 o ers a pure-strategy solution when there is none in Nash terms. It particularly provides a behavioral rationale for di erent pricing patterns, including Edgeworth price cycles and states of hypercompetition with supply shortages. We also analyze the impact of a change in firm size distribution. A merger among the biggest firms may lead to more price dispersion as it increases the maximum and decreases the minimum myopically stable price.

Keywords: International Relations/Trade; Political Economy (search for similar items in EconPapers)
Pages: 57
Date: 2021-12-21
New Economics Papers: this item is included in nep-com, nep-cwa, nep-gth and nep-reg
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Citations: View citations in EconPapers (4)

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https://ageconsearch.umn.edu/record/317126/files/ndl2021-032.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:317126

DOI: 10.22004/ag.econ.317126

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