On pure-strategy Nash equilibria in price-quantity games

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Abstract

This paper examines the existence and characteristics of pure-strategy Nash equilibria in oligopoly models in which firms set both prices and quantities. Existence is proved for a broad and natural class of price-quantity games. With differentiated products, the equilibrium outcome is similar to that of a price-only model. With undifferentiated products and limited spillover demand, there are rationing equilibria in which combined production falls short of market demand. Moreover, there might again be an equilibrium reflecting the outcome of a price game. Competition in price and quantity may thus yield Bertrand outcomes under a variety of market conditions.
Original languageEnglish
Place of PublicationMaastricht
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages23
Publication statusPublished - 1 Jan 2015

Publication series

SeriesGSBE Research Memoranda
Number018

Cite this

Bos, I., & Vermeulen, A. J. (2015). On pure-strategy Nash equilibria in price-quantity games. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 018