Leppänen2020_Article_PartialCommitmentInAnEndogenou.pdf (498.12 kB)
Download filePartial commitment in an endogenous timing duopoly
journal contribution
posted on 2019-01-10, 10:07 authored by Ilkka LeppanenA duopoly game with timing announcements endogenizes the sequence of commitments. In duopolistic price competition, endogenous moves lead to a coordination problem with two non-Pareto ranked subgame perfect equilibria (SPEs). In these SPEs both
firms prefer followership to leadership. We suggest that a unique SPE can be found if
firms use partial commitments to their timing announcements. Using partial commitments,
the firms first announce the timing of moves but reserve the option to deviate from this
announcement and pay a deviation cost. We show that given a sufficient asymmetry in
stochastic production technologies, there exists a unique SPE with sequential moves if the
deviation costs are sufficiently different or if a common deviation cost belongs to a suitable
interval. We also discuss the information sharing implications of the results and find that
information is not shared at the unique SPE.
History
School
- Business and Economics
Department
- Business
Published in
Annals of Operations ResearchVolume
287Pages
783 - 799Citation
LEPPANEN, I., 2019. Partial commitment in an endogenous timing duopoly. Annals of Operations Research, 287, pp.783-799Publisher
Springer (part of Springer Nature) © The Author(s)Version
- VoR (Version of Record)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution 4.0 International (CC BY 4.0) licence. Full details of this licence are available at: http://creativecommons.org/licenses/by/4.0/Acceptance date
2018-12-20Publication date
2019-01-16Notes
This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.ISSN
1572-9338Publisher version
Language
- en