On the relationship between quantity precommitment and Cournot games

Amr Farahat, Woonghee Tim Huh, Hongmin Li

Research output: Contribution to journalArticle

Abstract

We study a two-stage deterministic differentiated-product oligopoly competition game, called the quantity precommitment game, in which firms compete on quantity in the first stage and then compete on price in the second stage. We compare this game with a single-stage Cournot game, in which firms compete on quantity only and prices are set to clear the market. We show that any equilibrium of the quantity precommitment game is an equilibrium of the Cournot game under certain conditions that allow for commonly used demand functions and general spill models. Our approach yields insight into key properties that enable this relationship to hold.

Original languageEnglish (US)
Pages (from-to)109-122
Number of pages14
JournalOperations Research
Volume67
Issue number1
DOIs
StatePublished - Jan 1 2019

Keywords

  • Competition
  • Differentiated products
  • Pricing
  • Quantity and capacity decisions
  • Spill effects
  • Substitution

ASJC Scopus subject areas

  • Computer Science Applications
  • Management Science and Operations Research

Fingerprint Dive into the research topics of 'On the relationship between quantity precommitment and Cournot games'. Together they form a unique fingerprint.

  • Cite this