| Author: | Kühn, K-U. |
| Title: | Nonlinear pricing in vertically related duopolies |
| Journal: | RAND Journal of Economics
1997 : SPRING, VOL. 28:1, p. 37-62 |
| Index terms: | PRICING DUOPOLY |
| Language: | eng |
| Abstract: | This study analyzes a vertically separated duopolistic market in which manufacturers compete in wholesale price scheludes and retailers in quantity. There exists a continuum of equilibria under certainty. The introduction of an uncertain demand parameter reduces the set of equilibria, observed only by retailers. In markets quantity discounts emerge with only moderately decreasing returns to scale in manufacturing. With additive shocks to demand the equilibria coincide with those of markets in which vertically integrated firms compete in supply functions before market uncertainty is resolved. Generically equilibria in this model are not supply function equilibria. |
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