The Microeconomics Seminar: Every Wednesday at 12:15 pm.

Time: 12:15 pm – 1:30 pm
Date: 13th of December 2017
Place: Room 3001.

Nicolas SCHUTZ (University of Mannheim) – “All-Pay Oligopoly Contests: Price Competition with Unobservable Inventories” joint work with Joao Montez

Abstract: We study a class of duopoly games where firms build costly unobservable inventories before setting prices. That class of games includes classic benchmark models (such as Varian’s model of sales, Bertrand with asymmetric costs, and Bertrand with fixed costs) as special cases. We show that, if no firm has a significant advantage, then the game has a generically unique equilibrium, in which firms randomize their price choices and, conditional on that price choice, serve all their targeted demand. The payoff structure and equilibrium structure can be related to an all-pay contest with outside options and non-monotonic payoff functions. Moreover, this unique equilibrium converges to a Bertrand equilibrium as inventory costs becomes fully recoverable. Thus, standard and well-understood production-to-order outcomes can be seen as a special case of production-in-advance outcomes.

Paper here 

Organizers:
Marie-Laure Allain, Pierre Boyer, Laurent Linnemer  &  Morgane Cure (CREST)

Sponsors:
CREST

Lunch registration:

Link (before 10th of December 2017)