Firms` Strategic Decisions Theoretical and Empirical Findings

Volume: 1

Indexed in: EBSCO.

This eBook presents recent case studies on firms and their strategy employed in specific scenarios and industries. Readers will find, in this volume, an analysis of oligopolistic industries done by ...
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Strategic Price and Quantity Choices

Pp. 55-76 (22)

Daniel Cracau

Abstract

In this chapter, I present a systematic overview of the market outcomes for classical oligopoly games. This study contains six games: pure quantity competition, pure price competition as well as price and quantity competition, each with simultaneous and sequential moves. I present equilibrium prices, quantities and profits for each game. In particular, I present the mixed strategy equilibrium of the simultaneous price and quantity competition. This equilibrium was found by Gertner (1986), but remained unrecognized so far. From a comparison of market outcomes, I can classify situations where the choice of decision variable(s) and timing gives strategic advantages.

Keywords:

Decision variables, judo game, mixed strategy equilibrium, price, quantity, oligopoly competition, price leadership games, price-quantity game, simultaneous move games, sequential move games.

Affiliation:

University of Magdeburg, Faculty of Economics and Management, Universitaetsplatz 2, 39106 Magdeburg, Germany.