This paper applies the Jones Kierzkowski model to the contract manufacturing service industry. Stylized facts of that industry imply a theory of non-convex general equilibrium. The cost structure combines a constant marginal cost and a positive fixed cost; Marshalian free entry free exit prevails. This implies a distinct market structure (which is nether perfect nor monopolistic competition, no...

We compare the number of active firms, i.e. the number of firms producing a positive quantity, in equilibrium across four different models of oligopoly: Cournot and Bertrand with homogeneous or differentiated goods. We concentrate on the linear demand structure with constant marginal but asymmetric costs. (With symmetric costs, the results trivialize to all firms active or all firms inactive.) ...

We examine the role low-price guarantees allegedly play in supporting supracompetitive prices. We find that when firms can commit to matching or beating any lower price announced by a competitor, all Nash equilibria yield Bertrand selling prices. This result casts doubt on the robustness of the conclusions of models which restrict attention to meet-the-competition clauses only. JEL Classificati...

One of the most widely accepted principles of economics is the existence of gains from trade for every nation under certain conditions including perfect competition. In the last twenty years, trade economists have revolutionized the field by firmly establishing the possibility of modeling imperfectly competitive international markets. Despite this development, most still agree there are good re...

This paper analyzes the role of communication between firms in an infinitely repeated Bertrand game in which firms receive an imperfect private signal of a common value i.i.d. demand shock. It is shown that firms can use stochastic, inter-temporal market sharing as a perfect substitute for communication in low demand states. Therefore, partial communication in high demand states is sufficient t...

Alternative market structures are distinguishable by the degree of parallel action exhibited by producers. We show that the correlation between output levels varies systematically with the degree of interdependence among firms, and establish an ordering among alternative behavioral hypotheses (Cournot, Stackelberg, Edgeworth/Bertrand, collusion, and perfect competition). Because the ordering is...

We introduce a small cost of leading in the two-player action commitment game formulated by Hamilton and Slutsky (1990). We investigate a price competition model and find that any randomized strategy equilibria converge to the Bertrand equilibrium. JEL classification numbers: L13, C72

We analyze how sharing rules affect Nash equilibria in Bertrand games, where the sharing of profits at ties is a decisive assumption. Necessary conditions for either positive or zero equilibrium profits are derived. Zero profit equilibria are shown to exist under weak conditions if the sharing rule is “sign-preserving”. For Bertrand markets we define the class of “expectation sharing rules”, wh...

We examine spatial competition along a waterway when shippers are distributed over space. Competition is between barge and rail companies and among barge companies. Equilibrium prices are derived for two variations: oligopolistic rivalry between barge and rail operators, and oligopolistic rivalry among barge operators with terminals located at different points on the waterway. In the first vari...

Pricing Web services with different Quality of Service (QoS) classes over the Internet is a challenging scientific problem. Finding the optimal price per QoS class allows each provider to maximize its revenue and to solve the capacity planning problem. The most works presented in the literature focus on a monopolistic setting where one service provider sells one or more services of different cl...