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Endogenous Timing with Demand Uncertainty

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  • Fei Shi

Abstract

This paper develops an endogenous timing model for a quantity-setting duopoly with imperfect information on market, demand and costly market research. If the market research cost K is too high, market research never plays a role. For intermediate values of K, and independently of production costs, there are two SPNE with endogenous leadership. If Kis low, SPNE with endogenous leadership appear if the production costs of the leader are low enough relative to market conditions (e.g. large expected market capacity and small variance thereof). If both firms are relatively inefficient, there is a SPNE with simultaneous production.

Suggested Citation

  • Fei Shi, 2008. "Endogenous Timing with Demand Uncertainty," TWI Research Paper Series 30, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    • Handle: RePEc:twi:respas:0030
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    References listed on IDEAS

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    Cited by:

    1. David Rowell & Peter Zweifel, 2024. "Separating Equilibria with Search and Selection Effort: Evidence from the Auto Insurance Market," JRFM, MDPI, vol. 17(4), pages 1-25, April.

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    Keywords

    Endogenous timing; Market research; Endogenous leadership;
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