Optimal pricing in a duopoly: A noncooperative differential games solution (Q791422): Difference between revisions
From MaRDI portal
Added link to MaRDI item. |
Removed claims |
||
Property / author | |||
Property / author: Q170704 / rank | |||
Property / author | |||
Property / author: Engelbert J. Dockner / rank | |||
Revision as of 19:31, 9 February 2024
scientific article
Language | Label | Description | Also known as |
---|---|---|---|
English | Optimal pricing in a duopoly: A noncooperative differential games solution |
scientific article |
Statements
Optimal pricing in a duopoly: A noncooperative differential games solution (English)
0 references
1985
0 references
This paper deals with a differential games model of an oligopoly of n profit-maximizing firms competing for the same stock of customers. For the sale dynamics, it is assumed that the customers of each firm are driven away gradually by increasing product prices. Since the state variable is absent from the Hamiltonian maximizing conditions as well as from the adjoint equations, open-loop Nash solutions can be obtained. By using phase diagram analysis, for two players the behavior of the optimal pricing strategies can be characterized qualitatively. The main importance of the paper lies in the solution technique, rather than in the economic significance of the proposed model. Under the proposed assumptions, the two-point boundary-value problem resulting from the maximum principle is reduced to a terminal-value problem. It turns out that, for special salvage values of the market shares and if the planning horizon is not too short, nonmonotonic Nash-optimal price trajectories occur.
0 references
market structure theory
0 references
Nash-optimal price policies
0 references
duopoly of profit- maximizing firms
0 references
two-person nonzero-sum differential games
0 references
phase portrait analysis of Nash solutions
0 references
state separability
0 references
differential games model of an oligopoly
0 references