Journal article
Demand fluctuations and capacity utilization under duopoly
Economic theory, Vol.10(1), pp.131-146
06/01/1997
DOI: 10.1007/s001990050150
Abstract
This paper studies the impact of uncertain demand on firms’ capacity decisions when they operate in an oligopolistic environment. We define a two-stage game where firms choose capacity in the first stage without knowing which state of Nature is going to realize, and output levels in the second, knowing which state is realized. We prove the existence of a symmetric subgame perfect equilibrium at which firms are in excess capacity compared with the capacity they would choose in the Cournot certainty equivalent game.
Details
- Title: Subtitle
- Demand fluctuations and capacity utilization under duopoly
- Creators
- Jean J. Gabszewicz - UCLouvainSougata Poddar - UCLouvain
- Resource Type
- Journal article
- Publication Details
- Economic theory, Vol.10(1), pp.131-146
- DOI
- 10.1007/s001990050150
- ISSN
- 0938-2259
- eISSN
- 1432-0479
- Number of pages
- 16
- Language
- English
- Date published
- 06/01/1997
- Academic Unit
- Economics
- Record Identifier
- 9984963054402771
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