Limits of price competition: cost asymmetry and imperfect information

Sneha Bakshi ()
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Sneha Bakshi: Independent Researcher

International Journal of Game Theory, 2020, vol. 49, issue 4, No 1, 913-932

Abstract: Abstract In a class of asymmetric-cost duopoly price competition games, price-elastic individual demand reveals a threshold of informed buyers below which equilibrium is in monopoly prices. Even if the threshold is met, unless all buyers are informed, monopoly prices are listed and are more likely between less alike sellers. An increase in the efficient seller’s cost weakly reduces its rival’s price (in a first order stochastic dominated sense) without disturbing its profit. Lastly, increasing the number of sellers increases competitive pricing incentives.

Keywords: Uninformed buyers; Monopoly prices; Asymmetric costs; Price competition (search for similar items in EconPapers)
JEL-codes: D4 D8 L1 L4 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s00182-020-00717-1

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