In this paper we characterize the subgame perfect Nash equilibria of a location-then-price game where firms first choose locations and after that compete for prices in two subsequent periods. Locations are thus seen as long term commitments. There are two types of consumers, each with different...

The third generation UMTS auction in Germany raised an enormous amount of revenue, and at the same time achieved a more competitive market structure than other UMTS auctions in Europe. The present paper explains the design of that auction, and presents a game theoretic explanation of observed...

The neoclassical theory of the firm deals with the pattern of perfect competition, within which the perfect information available to economic agents provides instant allocation of production factors and access to economic goods. The Austrian School (C. Menger, L. von Mises, Hayek, etc.)...

We examine a market in which consumers are forced to rely on noisy price signals to select between homogeneous products. The noise originates either from firms' price obfuscation or consumers' bounded information processing capabilities. Standard models and empirical experiments of markets with...

Entry of new firms can be difficult or even impossible at capacity constrained facilities, despite the actual cost of entering is low. Using a game theoretic model of incumbent firms’ pricing behaviour under these conditions, it is found that under the assumption of Bertrand competition and...

This paper introduces a simple extensive form pricing game.The Bertrand outcome is a Nash equilibrium outcome in this game, but it is not necessarily subgame perfect.The subgame perfect equilibrium outcome features the following comparative static properties.The more similar firms are, the...

This paper provides a non-linear pricing rule for the valuation of assets on financial markets with intermediaries.The non-linearity arises from the fact that dealers charge a price for their intermediation between buyer and seller. The pricing rule we propose is an alternative for the wellknown...