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Edgeworth cycles with partial price commitment

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  • de Roos, Nicolas

Abstract

The price commitment model of Maskin and Tirole (1988) provides an extensively cited foundation for Edgeworth cycles. We examine the viability of Edgeworth cycles when price commitment is partial in the sense that a subset of firms are committed to price in each period. If multiple firms are not committed in each period, then the existence of Edgeworth cycle equilibria requires a demanding convexity condition on the profit function.

Suggested Citation

  • de Roos, Nicolas, 2017. "Edgeworth cycles with partial price commitment," Economics Letters, Elsevier, vol. 150(C), pages 122-125.
    • Handle: RePEc:eee:ecolet:v:150:y:2017:i:c:p:122-125
    DOI: 10.1016/j.econlet.2016.11.023
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    References listed on IDEAS

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    1. Robert Clark & Jean-Fran?ois Houde, 2013. "Collusion with Asymmetric Retailers: Evidence from a Gasoline Price-Fixing Case," American Economic Journal: Microeconomics, American Economic Association, vol. 5(3), pages 97-123, August.
    2. Nicolas de Roos & Vladimir Smirnov, 2020. "Collusion with intertemporal price dispersion," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 158-188, March.
    3. Michael D. Noel, 2008. "Edgeworth Price Cycles and Focal Prices: Computational Dynamic Markov Equilibria," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 345-377, June.
    4. Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-599, May.
    5. Castanias, Rick & Johnson, Herb, 1993. "Gas Wars: Retail Gasoline Fluctuations," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 171-174, February.
    6. Nicolas de Roos & Hajime Katayama, 2013. "Gasoline Price Cycles Under Discrete Time Pricing," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 175-193, June.
    7. Zhongmin Wang, 2009. "(Mixed) Strategy in Oligopoly Pricing: Evidence from Gasoline Price Cycles Before and Under a Timing Regulation," Journal of Political Economy, University of Chicago Press, vol. 117(6), pages 987-1030, December.
    8. Eckert, Andrew, 2003. "Retail price cycles and the presence of small firms," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 151-170, February.
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    Cited by:

    1. Hurtado, Carlos & González, Julia, 2024. "Price differences within retail gasoline markets," Energy Economics, Elsevier, vol. 133(C).
    2. Yao, Yao & Zhang, Jianxiong & Fan, Xiaoqing, 2022. "Strategic pricing: An anti-encroachment policy of retailer with uncertainty in retail service," European Journal of Operational Research, Elsevier, vol. 302(1), pages 144-157.

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    More about this item

    Keywords

    Edgeworth cycles; Price commitment;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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