We use laboratory experiments to examine the effect of firm size asymmetry on price leadership in a capacity constrained duopoly. The unique subgame perfect equilibrium of our duopoly game predicts that the large firm is the price leader. In the experiment, although price leadership by the large firm is frequently observed, behavior deviates significantly from the model’s prediction. Both small...

We consider a repeated duopoly game where each firm privately chooses its investment in quality, and realized quality is a noisy indicator of the firm’s investment. We focus on dynamic reputation equilibria, whereby consumers ‘discipline’ a firm by switching to its rival in the case that the realized quality of its product is too low. This type of equilibrium is characterized by consumers’ tole...

The main aim of this study is to construct an explicit form of an analytic solution of a multidimensional difference equation. To this end, we present a nonlinear Cournot duopoly model with unimodal reaction functions, show that its dynamical system is double logistic when the production externalities involved get stronger, and then give a constructive proof of the existence of an analytic solu...

An N-firm production game known as oligopoly will be examined with isoelastic price function and linear cost under al Cournot competition. After the best responses of the firms are determined, a dynamic system with adaptive expectations is introduced. It is first shown that the local asymptotic behavior of the system is identical with that of the adaptive adjustment process in which the firms c...

We analyze Hotelling’s duopoly model on the plane. There are two players (firms) located in different points inside a circle and the customers are distributed with some density in it. The solution of two game-theoretic problems is derived. The first problem is to find the equilibrium prices for the homogeneous goods, and the second problem is to find the equilibrium allocation of the players in...

Real-World networks have an inherently dynamic structure and are often composed of communities that are constantly changing in membership. Identifying these communities is of great importance when analyzing structural properties of networks. Hence, recent years have witnessed intense research in of solving the challenging problem of detecting such evolving communities. The mainstream approach t...

This paper analyzes an infinite horizon dynamic duopoly with stochastic demand in which firms face planning costs. In this set-up we derive the following results. First, non-synchronized planning equilibria can only exist if products are strategic substitutes while synchronized planning equilibria can only exist if products are strategic complements. This result is in sharp contrast to the pred...