A model with constant marginal costs is considered where firms choose first a period for production and then the amount to produce when competing in the market according to the resulting timing decisions. Multiple equilibria arise allowing for infinitely many industry output configurations encompassing one limit-output dominant firm and the Cournot equilibrium with free entry as extreme cases. At each of these equilibria a firm produces a positive amount only if this firm commits to produce at period one. Both Stackelberg and Cournot-like outcomes are sustainable as equilibria however. When the number of leaders is given, production at subsequent periods is always prevented, and industry output is sometimes larger than the entry preventing level.
TESORIERE A (2008). Endogenous timing with infinitely many firms. INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION, 2008, 1381-1388.
Endogenous timing with infinitely many firms
TESORIERE, Antonio
2008-01-01
Abstract
A model with constant marginal costs is considered where firms choose first a period for production and then the amount to produce when competing in the market according to the resulting timing decisions. Multiple equilibria arise allowing for infinitely many industry output configurations encompassing one limit-output dominant firm and the Cournot equilibrium with free entry as extreme cases. At each of these equilibria a firm produces a positive amount only if this firm commits to produce at period one. Both Stackelberg and Cournot-like outcomes are sustainable as equilibria however. When the number of leaders is given, production at subsequent periods is always prevented, and industry output is sometimes larger than the entry preventing level.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.