Price versus Quantity Competition with Cost Sharing

Arbeitspapier

We inspect the interlink between the endogenous choice of price- and quantity- setting behavior in an oligopolic market, and cost sharing among oligopolists. A typical situation of this sort is an oligopoly game where firms invest in product development first, and ten play a marketing game later. Only in the initial investment stage ,the firms set up a joint venture in order to share the costs. We discover that, in the presence of shared costs, the well-established result by Singh and Vives (1984) that firms endogenously choose quantity (resp., price) as a dominant strategy when their products are substitutes (resp., complements) may not be the only equilibrium outcome. In particular, the procedural order between firms` cost sharing decisions and their marketing decisions make a key difference in the resulting equilibrium profiles.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Quaderni - Working Paper DSE ; No. 343

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lambertini, Luca ; Sasaki, Dan ; Poddar, Sougata
• Event: Veröffentlichung
• (who): Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
• (where): Bologna
• (when): 1998

Further information

• DOI: doi:10.6092/unibo/amsacta/4966
• Handle: http://hdl.handle.net/10419/159184
• Last update: 10.03.2025, 11:45 AM CET