Consumer Rationing and the Cournot Outcome

Lepore Jason J
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Lepore Jason J: California Polytechnic State University - San Luis Obispo, jlepore@calpoly.edu

The B.E. Journal of Theoretical Economics, 2009, vol. 9, issue 1, 46

Abstract: For a symmetric two-stage game, where firms first choose capacities, then compete in prices, Kreps and Scheinkman (Bell Journal of Economics, 1983, 14(2), pp. 326-337) prove that under efficient rationing the Nash equilibrium coincides with the Cournot equilibrium. We extend the model to include asymmetric costs and provide new results showing that the capacity choice game is dominance-solvable, just like the Cournot game. Further, we provide a simple sufficient condition, under which the dominance-solvable result extends to proportional rationing. The results provide new insights into the robustness of Cournot coincidence under alternate demand rationing schemes.

Keywords: Bertrand-Edgeworth; demand rationing; Cournot; judo economics; capacity precommitment (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (5)

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DOI: 10.2202/1935-1704.1497

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