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Dynamic Oligopolistic Competition with Uncertainty and Supply Disruption Effects

Author

Listed:
  • Elena M. Parilina

    (Saint Petersburg State University, Saint Petersburg, Russia)

  • Stefan Wrzaczek

    (International Institute for Applied Systems Analysis (IIASA), Austria3Wittgenstein Center (IIASA, OeAW/VID, University of Vienna), Austria)

  • Georges Zaccour

    (Chair in Game Theory and Management, GERAD, HEC Montreal, Canada)

Abstract

We consider a finite-horizon discrete-time dynamic model of oligopolistic competition, with uncertain supply. The firms (retailers) make their decisions on quantities (sales) and orders of goods from a nonstrategic manufacturer taking into account uncertainty in demand parameters and available supply capacity. The retailers need to satisfy the joint available supply capacity constraint. The model is described as a game played over an event tree with given transition probabilities. We find a normalized equilibrium for the game with coupling constraints. The two-step procedure to find this equilibrium is described. We provide the necessary conditions of the equilibrium and examine different scenarios of uncertainties in the model by numerical simulations.

Suggested Citation

  • Elena M. Parilina & Stefan Wrzaczek & Georges Zaccour, 2024. "Dynamic Oligopolistic Competition with Uncertainty and Supply Disruption Effects," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 26(02), pages 1-21, June.
    • Handle: RePEc:wsi:igtrxx:v:26:y:2024:i:02:n:s0219198924400097
    DOI: 10.1142/S0219198924400097
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