Chapter 4

Strategic Price and Quantity Choices

Daniel Cracau

Abstract

In this chapter, I present a systematic overview of the market outcomes for classical oligopoly games. This study contains six games: pure quantity competition, pure price competition as well as price and quantity competition, each with simultaneous and sequential moves. I present equilibrium prices, quantities and profits for each game. In particular, I present the mixed strategy equilibrium of the simultaneous price and quantity competition. This equilibrium was found by Gertner (1986), but remained unrecognized so far. From a comparison of market outcomes, I can classify situations where the choice of decision variable(s) and timing gives strategic advantages.

Total Pages: 55-76 (22)

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