Low price signals high capacity
Klaus Kultti () and
Journal of Economics, 2014, vol. 112, issue 2, 165-181
We study pricing in a model where buyers are homogeneous and sellers have either capacity one or two. We show that if buyers observe prices but not capacities then an equilibrium exists where sellers of capacity two post lower prices than sellers of capacity one. The equilibrium satisfies the intuitive criterion. Copyright Springer-Verlag Wien 2014
Keywords: Prices; Capacity; Signalling; D24; D82 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:112:y:2014:i:2:p:165-181
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