This paper analyzes duopolistic price-leadership games in which firms have capacity constraints. The authors show that when capacities are in the range where the simultaneous-move price-setting game (with efficiently rationed demand) yields a mixed-strategy solution the large firm is indifferent...

This paper analyzes a duopolistic price setting game in which firms have loyal consumer segments but cannot distinguish them from price-sensitive consumers. The authors adapt a variant of H. Varian's (1980) simultaneous price setting game to analyze price-leader equilibria. The properties of the...