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Ambiguity and price competition

R. R. Routledge () and R. A. Edwards
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R. R. Routledge: UoL Management School, UoL
R. A. Edwards: University of Nottingham

Theory and Decision, 2020, vol. 88, issue 2, No 3, 256 pages

Abstract: Abstract There are few models of price competition in a homogeneous-good market which permit general asymmetries of information amongst the sellers. This work studies a price game with discontinuous payoffs in which both costs and market demand are ex ante uncertain. The sellers evaluate uncertain profits with maximin expected utilities exhibiting ambiguity aversion. The buyers in the market are permitted to split between sellers tieing at the minimum price in arbitrary ways which may be deterministic or random. The role of the primitives in determining equilibrium prices in the market is analyzed in detail.

Keywords: Ambiguity; Maximin utilities; Asymmetric information; Game theory (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11238-019-09725-4

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