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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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    1. Maskin, Eric & Tirole, Jean, 1987. "A theory of dynamic oligopoly, III : Cournot competition," European Economic Review, Elsevier, vol. 31(4), pages 947-968, June.
    2. Lau, Sau-Him Paul, 2002. "Solution of Multi-player Linear-Quadratic Alternating-Move Games and Its Application to the Timing Pattern of Wage Adjustment," Computational Economics, Springer;Society for Computational Economics, vol. 19(3), pages 341-357, June.
    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. 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.
    5. Eaton, Jonathan & Engers, Maxim, 1990. "Intertemporal Price Competition," Econometrica, Econometric Society, vol. 58(3), pages 637-659, May.
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