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Can Producers’ Price War End Up in an Optimal Allocation?

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  • Marta Kornafel

    (Department of Mathematics, Cracow University of Economics, ul. Rakowicka 27, 31-510 Kraków, Poland)

Abstract

The paper presents a theoretical framework for the phenomenon of the price war in the context of general equilibrium, with special attention to the production system. The natural question that arises is whether Nash-optimal production plans being the reactions to the changing prices can finally approximate a Nash-optimal production plan at the end of this war. To provide an answer, the production system is described as a parametric-multicriteria game. Referring to some results on the lower semicontinuty of the parametric weak-multicriteria Nash equilibria, we provide a positive answer for the stated problem.

Suggested Citation

  • Marta Kornafel, 2022. "Can Producers’ Price War End Up in an Optimal Allocation?," Mathematics, MDPI, vol. 10(2), pages 1-6, January.
    • Handle: RePEc:gam:jmathe:v:10:y:2022:i:2:p:265-:d:725932
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    References listed on IDEAS

    as
    1. Agnieszka Lipieta & Andrzej Malawski, 2016. "Price versus quality competition: in search for Schumpeterian evolution mechanisms," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1137-1171, December.
    2. Meghan Busse, 2002. "Firm Financial Condition and Airline Price Wars," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 298-318, Summer.
    3. Meghan R. Busse, 2002. "Firm Financial Condition and Airline Price Wars," Yale School of Management Working Papers ysm281, Yale School of Management.
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