EconPapers    
Economics at your fingertips  
 

All-Pay Oligopolies: Price Competition With Unobservable Inventory Choices

Joao Montez and Nicolas Schutz

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We study a class of games where stores source unobservable inventories in advance, and then simultaneously set prices. Our framework allows for firm asymmetries, heterogeneous consumer tastes, endogenous consumer information through advertising, and salvage values for unsold units. The payoff structure relates to a complete-information all-pay contest with outside options, non-monotonic winning and losing functions, and conditional investments. In the generically unique equilibrium, stores randomize their price choice and, conditional on that choice, serve all their targeted demand—thus, some inventories may remain unsold. As inventory costs become fully recoverable, the equilibrium price distribution converges to an equilibrium of the associated Bertrand game (where firms first choose prices and then produce to order). This suggests that with production in advance, the choice between a Cournot analysis and a Bertrand-type analysis, as properly generalized in this paper, should depend on whether or not stores observe rivals’ inventories before setting prices.

Keywords: Oligopoly; inventories; production in advance; all-pay contests; Bertrand convergence (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Pages: 56
Date: 2018-05
New Economics Papers: this item is included in nep-com and nep-gth
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.crctr224.de/research/discussion-papers/archive/dp020 (application/pdf)

Related works:
Journal Article: All-Pay Oligopolies: Price Competition with Unobservable Inventory Choices (2021) Downloads
Working Paper: All-Pay Oligopolies: Price Competition with Unobservable Inventory Choices (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2018_020

Access Statistics for this paper

More papers in CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany Kaiserstr. 1, 53113 Bonn , Germany.
Bibliographic data for series maintained by CRC Office ().

 
Page updated 2024-03-31
Handle: RePEc:bon:boncrc:crctr224_2018_020