English, Article, Journal or magazine article edition: Endogenous Price Leadership Eric van Damme; Sjaak Hurkens

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Bookmark: http://trove.nla.gov.au/version/111920
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Endogenous Price Leadership
Author
  • Eric van Damme
  • Sjaak Hurkens
Physical Description
  • preprint
Notes
  • We consider a linear price setting duopoly game with di®erentiated products and determine endogenously which of the players will lead and which will follow. While the follower role is most attractive for each firm, we show that waiting is more risky for the low cost firm so that, consequently, risk dominance considerations, as in Harsanyi and Selten (1988), allow the conclusion that only the high cost firm will choose to wait. Hence, the low cost firm will emerge as the endogenous price leader.
  • RePEc:upf:upfgen:581
  • We consider a linear price setting duopoly game with differentiated products and determine endogenously which of the players will lead and which will follow. While the follower role is most attractive for each firm, we show that waiting is more risky for the low cost firm so that, consequently, risk dominance considerations, as in Harsanyi and Selten (1988), allow the conclusion that only the high cost firm will choose to wait. Hence, the low cost firm will emerge as the endogenous price leader.
  • Price leadership, endogenous timing, risk dominance
  • RePEc:upf:upfgen:289
Language
  • English
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