Dynamic Oligopolistic Competition with Uncertainty and Supply Disruption Effects

Elena M. Parilina (), Stefan Wrzaczek and Georges Zaccour ()
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Elena M. Parilina: Saint Petersburg State University, Saint Petersburg, Russia
Stefan Wrzaczek: International Institute for Applied Systems Analysis (IIASA), Austria3Wittgenstein Center (IIASA, OeAW/VID, University of Vienna), Austria
Georges Zaccour: Chair in Game Theory and Management, GERAD, HEC Montreal, Canada

International Game Theory Review (IGTR), 2024, vol. 26, issue 02, 1-21

Abstract: We consider a finite-horizon discrete-time dynamic model of oligopolistic competition, with uncertain supply. The firms (retailers) make their decisions on quantities (sales) and orders of goods from a nonstrategic manufacturer taking into account uncertainty in demand parameters and available supply capacity. The retailers need to satisfy the joint available supply capacity constraint. The model is described as a game played over an event tree with given transition probabilities. We find a normalized equilibrium for the game with coupling constraints. The two-step procedure to find this equilibrium is described. We provide the necessary conditions of the equilibrium and examine different scenarios of uncertainties in the model by numerical simulations.

Keywords: Disruption in supply; retail competition; dynamic games played over event trees; Rosen equilibrium (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0219198924400097

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