In this paper we investigate how capacity adjustment costs affect a firm¡¯s response to demand uncertainty. We first characterize the pattern of optimal capacity adjustment for a monopolistic firm and find that capacity behaves as a stabilizer for the firm¡¯s output. For duopolistic firms...

We consider the equilibrium choice of selling mechanisms by competing firms. For a model where a number of sellers choose sequentially between any two selling mechanisms, there is a unique (subgame perfect) equilibrium under fairly natural assumptions about the monotonicity and differences of...