Patterns of Competitive Interaction
Mark Armstrong () and
John Vickers ()
No 13821, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We explore patterns of competitive interaction by studying mixed-strategy equilibrium pricing in oligopoly settings where consumers vary in the set of suppliers they consider for their purchase. In the case of "nested reach" we find equilibria, unlike those in existing models, in which price competition is segmented: small firms offer only low prices and large firms only offer high prices. We characterize equilibria in the three-firm case using correlation measures of competition between pairs of firms. We then contrast them with equilibria in the parallel model with capacity constraints. A theme of the analysis is how patterns of consumer consideration matter for competitive outcomes.
Keywords: Bertrand-Edgeworth competition; Captive customers; Consideration sets; Mixed strategies; price dispersion (search for similar items in EconPapers)
JEL-codes: D43 D83 L11 L13 L15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at firstname.lastname@example.org
Working Paper: Patterns of Competitive Interaction (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13821
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=13821
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().