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Endogenous timing in a mixed oligopoly under demand uncertainty

Jianhu Zhang () and Changying Li ()

Journal of Economics, 2013, vol. 108, issue 3, 273-289

Abstract: This paper analyzes a Hotelling-type game in a mixed oligopoly, where firms can either enter the market in period 1, facing demand uncertainty, or postpone their entry, in order to acquire complete information. It is shown that, for a high (low) level of uncertainty, there is a pure (mixed)-strategy equilibrium. Moreover, the standard result in the literature—that uncertainty is a differentiation force, is only possible when the degree of uncertainty is small. An increase in the degree of uncertainty could force firms to delay their entry and lead to a socially optimal outcome. Copyright Springer-Verlag 2013

Keywords: Endogenous timing; Mixed oligopoly; Demand uncertainty; Horizontal differentiation; C72; D43; D81; L13; R30; H42 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s00712-012-0273-9

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Handle: RePEc:kap:jeczfn:v:108:y:2013:i:3:p:273-289