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| Author: | Dana, J., Jr. |
| Title: | Equilibrium price dispersion under demand uncertainty: the roles of costly capacity and market structure |
| Journal: | RAND Journal of Economics
1999 : WINTER, VOL. 30:4, p. 632-660 |
| Index terms: | PRICES DEMAND UNCERTAINTY |
| Language: | eng |
| Abstract: | When capacity is costly and prices are set in advance, firms facing uncertain demand will sell output at multiple prices and limit the quantity available at each price. The author shows that the optimal price strategy of a monopolist and the unique pure-strategy Nash equilibria of oligopolists both exhibit intrafirm price dispersion. Moreover, as the market becomes more competitive, prices become more dispersed, a pattern documented in the airline industry. |
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