Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model Export

@article{davidson-deneckere-86, abstract = {In this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions. We analyze a duopoly model in which firms choose their capacities before engaging in Bertrand-like price competition. We demonstrate hat the Cournot outcome is unlikely to emerge in such markets and that the equilibrium tends to be more competitive than the Cournot model would predict. In addition, our results indicate a tendency toward asymmetric firm sizes and price dispersion that results from the mixed strategies firms use in equilibrium.}, author = {Davidson, Carl and Deneckere, Raymond}, citeulike-article-id = {1801411}, citeulike-linkout-0 = {http://www.jstor.org/stable/2555720}, journal = {The RAND Journal of Economics}, keywords = {450-1, competition}, number = {3}, pages = {404--415}, posted-at = {2007-10-21 15:01:03}, priority = {2}, title = {Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model}, url = {http://www.jstor.org/stable/2555720}, volume = {17}, year = {1986} }

TY - JOUR ID - davidson-deneckere-86 L3 - citeulike-article-id:1801411 N2 - In this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions. We analyze a duopoly model in which firms choose their capacities before engaging in Bertrand-like price competition. We demonstrate hat the Cournot outcome is unlikely to emerge in such markets and that the equilibrium tends to be more competitive than the Cournot model would predict. In addition, our results indicate a tendency toward asymmetric firm sizes and price dispersion that results from the mixed strategies firms use in equilibrium. IS - 3 JF - The RAND Journal of Economics EP - 415 TI - Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model VL - 17 SP - 404 KW - 450-1 KW - competition AU - Davidson, Carl AU - Deneckere, Raymond PY - 1986/// UR - http://www.jstor.org/stable/2555720 ER -