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Winner-take-all price competition

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Summary.

We analyze an oligopoly model of homogeneous product price competition that allows for discontinuities in demand and/or costs. Conditions under which only zero profit equilibrium outcomes obtain in such settings are provided. We then illustrate through a series of examples that the conditions provided are “tight” in the sense that their relaxation leads to positive profit outcomes.

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Authors and Affiliations

  1. Department of Business Economics and Public Policy, Kelley School of Business,Indiana University, 1309 East Tenth Street, Bloomington, IN 47405-1701, USA% (e-mail: mbaye@indiana.edu) , , , , , , US

    Michael R. Baye

  2. Woodrow Wilson School for Public and International Affairs and Department of Economics,Princeton University, Princeton, NJ 08544, USA (e-mail: rjmorgan@princeton.edu) , , , , , , US

    John Morgan

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  1. Michael R. Baye
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  2. John Morgan
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Received: April 7, 2000; revised version: September 14, 2000

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Baye, M., Morgan, J. Winner-take-all price competition. Econ Theory 19, 271–282 (2002). https://doi.org/10.1007/PL00004212

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  • DOI: https://doi.org/10.1007/PL00004212

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