1,721,013 research outputs found
Spatial duopoly under uniform delivered pricing when firms avoid turning customers away
Full text linkThis paper analyses a spatial duopoly model where firms produce homogeneous goods and set a uniform delivered price. In contrast with the existing literature, the paper shows that an equilibrium always exists. The crucial assumption in restoring the possibility of equilibrium is that firms cannot ration the supply of the good they produce. The market equilibrium is characterised for two different tie-breaking rules. When consumers buy from the nearest firm in case of equal prices, it is found that any symmetric price pair within a given range is a Nash equilibrium. If demand in each local market is equally split between the two firms charging the same price, there is only one equilibrium price pair, at which both firms make zero profits. Some welfare comparisons between the equilibria under the different tie-breaking rules are also provided
Spatial duopoly under uniform delivered pricing when firms avoid turning customers away
Full text linkThis paper studies a spatial duopoly under uniform delivered pricing when firms do not ration the supply of the good, thus extending to a spatial context the analysis of oligopolistic markets with no rationing. The paper shows the existence of the equilibrium in prices under different tie-breaking rules (TBR) and compare the features of the equilibria found under these rules, thereby allowing to highlight the importance of the choice of the TBR in studying these models. When consumers buy from the nearest firm in case of equal prices (efficient TBR), any symmetric price pair within a given range is a Nash equilibrium, with each firm serving exactly half of the market line. If demand in each local market is equally split between the firms charging the same price (random TBR), the only equilibrium price is the one that gives zero profits to each firm. The degree of competitiveness of the market crucially depends on the TBR. Under the efficient TBR, all (but one) price equilibria deliver positive profits to both firms. Under the random TBR, the market outcome is very competitive in that firms make zero profits. None of the equilibria found under any tie-breaking rule are allocatively efficient
Who gains from universal service obligations? A welfare analysis of the rule "one price for everywhere"
No full textPrices and locations in a spatial duopoly under uniform delivered pricing
Full text linkI analyse a two-stage location-price duopoly game under uniform delivered pricing when firms produce homogenous goods and are unable to ration the supply. Two tie-breaking rules (TBR) are studied: consumers either buy from the nearest firm or buy from either firms with equal probabilities. Under the first TBR, I find multiple single-price equilibria.
Equilibrium locations are shown to be symmetric and to be such that the distance between firms increases (decreases) with the transportation cost (c) when c is high (low). Under the second TBR, firms cluster to the centre of the market line and choose the price that gives them zero profits. Surprisingly, when c is low, consumers are better off when they randomly select from which firm to buy
“Pricing Discretion and Price Regulation in Competitive Industries”. CEIS Tor Vergata – Research Paper Series, vol. 23, n. 69
No full text- …
