We analyze a simple dynamic durable good oligopoly model where sellers are capacity constrained. Two incumbent sellers and potential entrants choose their capacities at the start of the game. We solve for equilibrium capacity choices and the (necessarily mixed) pricing strategies. In...

A dynamic incomplete information game is set up to study the introduction of a durable good when consumers can learn the quality of the good from previous buyers. High sales today imply fewer potential buyers tomorrow but each of them with better information about the good. Consumers also update...

Recent changes in telecommunications markets raise the issue of how price restrictions across markets impact strategic entry and pricing decisions. The Telecommunications Act of 1996 opens all telecommunications markets to competition and contains a provision for universal service, requiring...

We examine oligopolistic markets with both intrabrand and interbrand competition. We characterize equilibrium contracts involving a royalty (or wholesale price) and a fee when each upstream firm contracts with multiple downstream firms. Royalties control competition between own downstream firms...

This paper explores the endogenous joint evolution of demand and supply in new markets. Firms and consumers learn, in a Bayesian fashion, by observing the behavior of other firms and consumers, respectively. As a result, endogenous information diffusion takes place on both sides of the market....

A dynamic entry and exit game is studied, where, following Dixit and Shapiro (1986), firms play symmetric mixed strategies. Due to coordination considerations, the value of incumbency is increasing in the number of incumbent firms (up to the point where there is excess capacity). This feature of...

In several interesting markets, demand is an increasing function of past sales because of learning, network externalities, or fashion. This paper examines entry into such markets. The two key elements of the model are that firms are uncertain about the demand (and learn in a Bayesian fashion)...

This paper presents a dynamic model of entry and exit in competitive markets with demand uncertainty and Bayesian learning. There is a unique equilibrium path characterized by a pair of simple zero-expected profit equations.

In several interesting markets, demand is an increasing function of past sales, because of learning, network externalities, or "fashion." This paper examines entry into such markets where demand is initially unknown to the firms but grows endogenously over time. The capacity expansion paths of...

We examine sales and leasing of a durable good in an asymmetric duopoly. We find that inefficient firms tend to lease more. While the low cost firm sells more than the high cost firm, the high cost firm leases more. Further, an increase in unit costs implies a higher ratio of leased units to...