Choice of strategic variables under relative profit maximization in asymmetric oligopoly: non-equivalence of price strategy and quantity strategy

Authors

  • Atsuhiro Satoh Faculty of Economics, Osaka University of Commerce
  • Yasuhito Tanaka

DOI:

https://doi.org/10.17811/ebl.3.2.2014.115-126

Abstract

We consider choice of strategic variables under relative profit maximization in an asymmetric oligopoly with differentiated goods such that there are three firms, Firm 2 and 3 have the same cost function, but Firm 1 has a different cost function. We show that there are two pure strategy sub-game perfect equilibria. 1) All firms choose the outputs as their strategic variables,  2)Firm 2 and 3 choose the outputs as their strategic variables, and Firm 1 chooses the price as its strategic variable.

References

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Tanaka, Y. (2013) “Irrelevance of the choice of strategic variables in duopoly under relative profit maximization”, Economics and Business Letters, 3(2), 75-83.

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Published

2014-05-20

How to Cite

Satoh, A., & Tanaka, Y. (2014). Choice of strategic variables under relative profit maximization in asymmetric oligopoly: non-equivalence of price strategy and quantity strategy. Economics and Business Letters, 3(2), 115-126. https://doi.org/10.17811/ebl.3.2.2014.115-126