It takes two to tango: equilibria in a model of sales (Q1195600): Difference between revisions
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Revision as of 14:53, 16 May 2024
scientific article
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English | It takes two to tango: equilibria in a model of sales |
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It takes two to tango: equilibria in a model of sales (English)
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12 January 1993
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The authors show that the Varian model of sales with more than two firms has two types of equilibria: a unique symmetric equilibrium, and a continuum of asymmetric equilibria. In contrast, the 2-firm game has a unique equilibrium that is symmetric. For the \(n\) firm case the asymmetric equilibria imply mixed strategies that can be ranked by first- order stochastic dominance. This enables one to rule out asymmetric equilibria on economic grounds by constructing a metagame in which both firms and consumers are players. The unique subgame perfect equilibrium of this metagame is symmetric.
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mixed-strategy
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locked-in consumers
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Varian model of sales
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unique symmetric equilibrium
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continuum of asymmetric equilibria
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metagame
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unique subgame perfect equilibrium
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