Duopoly with Both Ruin and Entry.
Duopoly is modeled here as a prisoner's dilemma repeated in continuous time. Firms wish to maximize discounted flows of dividend payments, which are paid when capitalization levels permit. A firm is ruined when its capitalization falls below zero, but each ruined firm is immediately replaced by a new entrant. Attempting to ruin a rival is not necessarily an attractive strategy here, since the postentry game against the new rival may be a less favorable one. On the other hand, firms that are close to ruin have little to lose by playing aggressively and, hence, are attractive targets of aggression themselves. Equilibria are constricted that reflect these considerations.
Year of publication: |
1989
|
---|---|
Authors: | Rosenthal, Robert W. ; Spady, Richard H. |
Published in: |
Canadian Journal of Economics. - Canadian Economics Association - CEA. - Vol. 22.1989, 4, p. 834-51
|
Publisher: |
Canadian Economics Association - CEA |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Duopoly with both ruin and entry
Rosenthal, Robert W., (1989)
-
Spady, Richard H., (2015)
-
Random Reservation Prices and Bidding Behavior in OCS Drainage Auctions
Hendricks, Kenneth, (1989)
- More ...