Procedures for Computing Equilibria of the Oligopoly Expansion Game under Predetermined Multi-Period Pricings. Part 2: Second-Lowest Marginal-Cost Pricing

Jing-Yuan Wei and Yves Smeers ()
Additional contact information
Jing-Yuan Wei: Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium
Yves Smeers: Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium

No 1996022, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: A two-stage game is used in this paper to model a long-run market with spatially separated producers and with multi-period demands: first, firms simultaneously and independently invest their capacities; second, after capacities are set up in the first stage and made public, firms engage in a short-run price competition, and the second lowest marginal cost is assumed to he the equilibrium price of the competition. A fixed point procedure is formulated for computing the equilibria of the game. Each cycle of the procedure solves successively a Nash-Cournot model and a Hobbs model. It is shown that when the peak supply is higher than the off-peak supply or the peak prices are upper bounded not higher than the Cournot prices, the fixed point of the procedure constitutes an equilibrium of the two-stage game. A minor modification of the procedure is used to model a long-run oligopoly where potential entrants exist. A market organized by three European countries is simulated by the procedure.

Date: 1996-05-01
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://sites.uclouvain.be/core/publications/coredp/coredp1996.html (text/html)

Related works:
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:cor:louvco:1996022

Access Statistics for this paper

More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().