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Endogenous timing in a mixed oligopoly under demand uncertainty

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  • Jianhu Zhang
  • Changying Li

Abstract

This paper analyzes a Hotelling-type game in a mixed oligopoly, where firms can either enter the market in period 1, facing demand uncertainty, or postpone their entry, in order to acquire complete information. It is shown that, for a high (low) level of uncertainty, there is a pure (mixed)-strategy equilibrium. Moreover, the standard result in the literature—that uncertainty is a differentiation force, is only possible when the degree of uncertainty is small. An increase in the degree of uncertainty could force firms to delay their entry and lead to a socially optimal outcome. Copyright Springer-Verlag 2013

Suggested Citation

  • Jianhu Zhang & Changying Li, 2013. "Endogenous timing in a mixed oligopoly under demand uncertainty," Journal of Economics, Springer, vol. 108(3), pages 273-289, April.
    • Handle: RePEc:kap:jeczfn:v:108:y:2013:i:3:p:273-289
    DOI: 10.1007/s00712-012-0273-9
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    References listed on IDEAS

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    Cited by:

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    2. Armel Jacques, 2022. "Endogenous timing of technological choices of flexibility in a mixed duopoly," TEPP Working Paper 2022-04, TEPP.
    3. Shuxiao Sun & Xiaona Zheng & Huaqing Hu & Tao Huang, 2023. "Spatial competition and social welfare considering different feasible location regions," Journal of Economics, Springer, vol. 138(1), pages 17-50, January.
    4. Young Kwark & Jianqing Chen & Srinivasan Raghunathan, 2018. "User-Generated Content and Competing Firms’ Product Design," Management Science, INFORMS, vol. 64(10), pages 4608-4628, October.

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    More about this item

    Keywords

    Endogenous timing; Mixed oligopoly; Demand uncertainty; Horizontal differentiation; C72; D43; D81; L13; R30; H42;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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