This paper examines capacity-constrained oligopoly pricing with sellers who seek myopic improvements. We employ the Myopic Stable Set solution concept and establish the existence of a unique pure-strategy price solution for any given level of capacity. This solution is shown to coincide with the...

This paper considers three hypotheses about the strategic origin of price dispersion in homogeneous product online sales. The first two are the E-equilibrium and the quantal-response equilibrium (QRE) in a pure Bertrand setting involving the boundedly rational behavior of sellers. The third...

Increased sales due to promotions could be at the expense of competitors: such sales come from consumers with relatively weak brand preferences. However, increased sales from brand loyal consumers could well cannibalize sales of the promoted brand. An unintended consequence of promotions is that...

Electricity markets employ different congestion management methods to handle the limited transmission capacity of the power system. This paper compares production efficiency and other aspects of nodal and zonal pricing. We consider two types of zonal pricing: zonal pricing with Available...

Most products are produced and sold by supply chain networks, where an interconnected network of producers and intermediaries set prices to maximize their profits. I show that there exists a unique equilibrium in a price-setting game on a network. The key distortion reducing both total profits...

We investigate the impact of strategic consumer behavior on retailers' dynamic pricing decisions. We present a stylized two-period model, and test the equilibrium predictions in a set of behavioral experiments in which human subjects played the role of pricing managers. Our main insight is that...

Firms that must choose capacity in advance of observing uncertain or time varying demand sometimes have more inventory than their full price customers will consume. By pricing a limited quantity at below market clearing rates, “rationed promotions” allow sellers to recruit enough excess...

In this paper, we characterize the set of pure strategy undominated equilibria in differentiated Bertrand oligopolies with linear demand and constant unit costs when firms may prefer not to produce. When all firms are active, there is a unique equilibrium. However, there is a continuum of...

We study an extension of the model of Rubinstein (1993) to two firms, competing in a market with consumers who are boundedly rational with respect to processing information. The cognitive bound forces customers to partition the price space. Rubinstein shows that a monopolist is able to earn a...

We address a generic price competition model in an industry with an arbitrary number of competitors, each offering all or a subset of a given line of N products. The products are substitutes in the sense that the demand volume of each product weakly increases whenever the price of another...