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Endogenous Rationing in a Differentiated Product Duopoly

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  • Boyer, Marcel
  • Moreaux, Michel

Abstract

In this paper, the authors characterize the equilibria of Stackelberg duopolies with differentiated products, where the firms are fighting either in prices and quantities or in prices and serving capacities. It is shown that in the price-quantity case there is always rationing by the leader, but in the price-serving capacity case the leader is rationing only if the goods are close substitutes. Hence, rationing may appear as an equilibrium results. This kind of equilibrium is specific to the Stackelberg competition. Rationing never appears in a duopoly (with the same strategy spaces) where the firm moves are simultaneous. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Boyer, Marcel & Moreaux, Michel, 1989. "Endogenous Rationing in a Differentiated Product Duopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 877-888, November.
    • Handle: RePEc:ier:iecrev:v:30:y:1989:i:4:p:877-88
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    Cited by:

    1. Boyer, Marcel & Lasserre, Pierre & Moreaux, Michel, 2012. "A dynamic duopoly investment game without commitment under uncertain market expansion," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 663-681.
    2. Boyer, Marcel & Moreaux, Michel, 1989. "Rationnement endogène et structure de marché," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(1), pages 119-145, mars.
    3. Bos, Iwan & Vermeulen, Dries, 2021. "Equilibrium existence with spillover demand," Economics Letters, Elsevier, vol. 208(C).
    4. Bos, Iwan & Vermeulen, Dries, 2021. "On pure-strategy Nash equilibria in price–quantity games," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    5. Emmanuel Dechenaux & Dan Kovenock, 2011. "Endogenous rationing, price dispersion and collusion in capacity constrained supergames," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 47(1), pages 29-74, May.
    6. Heywood, John S. & Li, Dongyang & Ye, Guangliang, 2023. "Private provision of price excludable public goods by rivals," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 291-307.
    7. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2000. "Preemption and Rent Dissipation with Multiple Investments," CIRANO Working Papers 2000s-06, CIRANO.
    8. Yousefimanesh, Niloofar & Bos, Iwan & Vermeulen, Dries, 2023. "Strategic rationing in Stackelberg games," Games and Economic Behavior, Elsevier, vol. 140(C), pages 529-555.
    9. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2001. "Preemption and Rent Dissipation under Bertrand Competition," Cahiers de recherche du Département des sciences économiques, UQAM 20-04, Université du Québec à Montréal, Département des sciences économiques.
    10. Tasnadi, Attila, 2002. "On probabilistic rationing methods," Mathematical Social Sciences, Elsevier, vol. 44(2), pages 211-221, November.

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