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Intertemporal price competition with exogenous demand shocks

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  • Leufkens, Kasper
  • Peeters, Ronald

Abstract

In this paper we show that in a differentiated product market, the presence of exogenous demand shocks leads to countercyclical price behavior when firms are committed to prices in the short run.

Suggested Citation

  • Leufkens, Kasper & Peeters, Ronald, 2008. "Intertemporal price competition with exogenous demand shocks," Economics Letters, Elsevier, vol. 99(2), pages 301-303, May.
    • Handle: RePEc:eee:ecolet:v:99:y:2008:i:2:p:301-303
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    References listed on IDEAS

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    3. 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.
    4. Eaton, Jonathan & Engers, Maxim, 1990. "Intertemporal Price Competition," Econometrica, Econometric Society, vol. 58(3), pages 637-659, May.
    5. R. M. Cyert & M. H. DeGroot, 1970. "Multiperiod Decision Models with Alternating Choice as a Solution to the Duopoly Problem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 410-429.
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