Dynamic Price Competition with Capacity Constraints and Strategic Buyers

Nikolaos Vettas () and Gary Biglaiser

No 4315, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse a set of simple dynamic models where sellers are capacity constrained over the length of the model. Buyers act strategically in the market, knowing that their purchases may affect future prices. The model is examined when there are single and multiple buyers, with both linear and non-linear pricing. We find that, in general, there are only mixed strategy equilibria and that sellers get a rent above the amount needed to satisfy the market demand that the other seller cannot meet. Buyers would like to commit not to buy in the future. Furthermore, sellers? market shares tend to be maximally asymmetric with high probability, even though they are ex ante identical.

Keywords: Capacity constraints; Bilateral oligopoly; Linear and non-linear pricing (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 L22 (search for similar items in EconPapers)
Date: 2004-03
New Economics Papers: this item is included in nep-com, nep-fin and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Dynamic Price Competition with Capacity Constraints and a Strategic Buyer (2012)
Working Paper: Dynamic Price Competition with Capacity Constraints and a Strategic Buyer (2012)
Working Paper: Dynamic price competition with capacity constraints and strategic buyers (2007)
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