Simultaneous vs. Sequential Price Competition with Incomplete Information
Leandro Arozamena () and
Federico Weinschelbaum ()
Department of Economics Working Papers from Universidad Torcuato Di Tella
We compare the equilibria that result from sequential and simultaneous moves when two firms compete à la Bertrand in a homogeneous-good market. and firms’ unit costs are private information. Alternatively, our setup can be interpreted as a procurement auction with endogenous quantity where the buyer uses a first-price format if moves are simultaneous and she awards one bidder a right of first refusal if moves are sequential. We show that the first mover can be more or less aggressive in the sequential than it would be in a simultaneous game. In addition, in the case of sequential choices there is a second-mover advantage. Finally, we prove that, under some conditions, buyer and total surplus are larger when moves are simultaneous.
Keywords: oligopoly, auctions with endogenous quantity; right of first refusal; secondmover advantage. (search for similar items in EconPapers)
JEL-codes: D44 K12 L14 (search for similar items in EconPapers)
Pages: 14 pages
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Journal Article: Simultaneous vs. sequential price competition with incomplete information (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:udt:wpecon:2008_3
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