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Kreps & Scheinkman with Product Differentiation

Author

Listed:
  • Stephen Martin

    (Department of Economics, Purdue University, West Lafayette, IN 47906, USA)

Abstract

Kreps and Scheinkman (1983)'s celebrated result is that in a two-stage model of a market with homogeneous products in which firms noncooperatively pick capacities in the first stage and set prices in the second stage, the equilibrium outcome is that of a one-shot Cournot game. This note derives capacity best response functions for the first stage and extends the Kreps and Scheinkman result to the case of differentiated products.

Suggested Citation

  • Stephen Martin, 2019. "Kreps & Scheinkman with Product Differentiation," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 14(2), pages 203-219, June.
    • Handle: RePEc:fec:journl:v:14:y:2019:i:2:p:203-219
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    Download full text from publisher

    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-008-019-0011-4
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    Cited by:

    1. Aramendia, Miguel & Wen, Quan, 2020. "Myopic perception in repeated games," Games and Economic Behavior, Elsevier, vol. 119(C), pages 1-14.

    More about this item

    Keywords

    Kreps and Scheinkman; capacity choice; Cournot; oligopoly; product differentiation;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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