Elastic demand, sunk costs and the Kreps-Scheinkman extension of the Cournot model

Paul Madden
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Paul Madden: School of Economic Studies, Manchester University, Manchester M13 9PL, UK

Economic Theory, 1998, vol. 12, issue 1, 199-212

Abstract: The paper shows that, with any rationing mechanism between the efficient and proportional extremes, the Kreps-Scheinkman two-stage quantity-price game reduces to the Cournot model if demand is uniformly elastic and if all costs are sunk at the first stage, thus providing positive results to set against existing negative statements.

JEL-codes: C72 D43 L13 (search for similar items in EconPapers)
Date: 1998-06-16
Note: Received: May 24, 1995; revised version: March 6, 1997
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Citations: View citations in EconPapers (26)

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