Production in advance versus production to order: Equilibrium and social surplus

Attila Tasnádi

Corvinus Economics Working Papers (CEWP) from Corvinus University of Budapest

Abstract: We determine a symmetric mixed-strategy equilibrium of the production-in-advance type symmetric capacity-constrained Bertrand-Edgeworth duopoly game for the most challenging case of intermediate capacities, which was unknown so far. Based on the obtained equilibrium we show that economic surplus within the production-to-order type environment is higher than in the respective production-in-advance type one, and therefore production-to-order should be preferred to production-in-advance if the mode of production can be influenced by the government.

Keywords: Price-quantity games; Bertrand-Edgeworth competition (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2019-06-10
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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Related works:
Journal Article: Production in advance versus production to order: Equilibrium and social surplus (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cvh:coecwp:2019/06

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