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Asymmetric dynamic price competition with uncertainty
Author(s) -
Ferreira Fernanda A.,
Pinto Alberto A.
Publication year - 2007
Publication title -
pamm
Language(s) - English
Resource type - Journals
ISSN - 1617-7061
DOI - 10.1002/pamm.200700711
Subject(s) - duopoly , microeconomics , competition (biology) , production (economics) , unitary state , economics , distribution (mathematics) , industrial organization , econometrics , cournot competition , mathematics , ecology , biology , mathematical analysis , political science , law
We consider a dynamic setting‐price duopoly model in which a dominant (leader) firm moves first and a subordinate (follower) firm moves second. We suppose that each firm has two different technologies, and uses one of them according to a certain probability distribution. The use of either one or the other technology affects the unitary production cost. We analyse the effect of the production costs uncertainty on the profits of the firms, for different values of the intercept demand parameters. (© 2008 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)