Market Sharing and Price Leadership

Ante Farm ()
Additional contact information
Ante Farm: Swedish Institute for Social Research, Stockholm University, Postal: SE-106 91 Stockholm, Sweden

No 3/2009, Working Paper Series from Stockholm University, Swedish Institute for Social Research

Abstract: This paper proposes an alternative to the traditional model of supply and demand in markets where consumers take prices as given. Within the framework of “no side payments and partial preplay communication” firms are assumed to decide non-cooperatively on production and marketing while the market price is set by a competitive price leader, i.e. a firm preferring the lowest market price. Predictions include excess supply and a revenuemaximizing market price in markets where production precedes sales. In markets where sales precede production competitive price leadership predicts monopoly pricing but not necessarily monopoly profits if firms are “sufficiently similar”, while the presence of firms with high costs or low capacities will make it possible for the price leader, in some circumstances, to increase its market share and also its profits by reducing its price. And the threat of costly competition for market shares may reduce the market price even for identical firms.

Keywords: Pricing; oligopoly; price leadership; market sharing (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2009-03-12
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sofi.su.se/content/1/c6/03/09/74/WP09no3.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://www.sofi.su.se/content/1/c6/03/09/74/WP09no3.pdf [301 Moved Permanently]--> https://www.sofi.su.se/content/1/c6/03/09/74/WP09no3.pdf)

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:hhs:sofiwp:2009_003

Access Statistics for this paper

More papers in Working Paper Series from Stockholm University, Swedish Institute for Social Research SOFI, Stockholm University, SE-10691 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Daniel Rossetti ( this e-mail address is bad, please contact ).