Dynamic demand and noncompetitive intertemporal output adjustments: correction and extension

Franz Wirl ()
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Franz Wirl: University of Vienna

Central European Journal of Operations Research, 2024, vol. 32, issue 2, No 12, 483-505

Abstract: Abstract While hundreds of papers study the strategic interactions of oligopolists facing sticky prices only very few treat the in my opinion more important and opposite case of sticky or sluggish demand and supply, e.g., for energy. This point was taken up in Wirl (Int J Ind Organ 28:220–229, 2010) but unfortunately, the computation of the linear Markov perfect equilibrium is wrong. The situation in energy markets following Russia’s invasion of Ukraine adds a topical element to the theoretical analysis. Application to the oil market suggests that the difference between collusion and oligopolistic competition among few (symmetric) players is small for Markov perfect linear eqilibria. This is in stark contrast to the outcome in open loop strategies.

Keywords: Dynamic demand; Costly output adjustments; Differential game; Multiple linear Markov perfect equilibria (search for similar items in EconPapers)
JEL-codes: C61 C72 L13 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10100-023-00860-6

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