scholarly journals Entry Deterrence in a Duopoly Market

2007 ◽  
Vol 7 (1) ◽  
Author(s):  
James D. Dana ◽  
Kathryn E. Spier
Keyword(s):  
Market Price ◽  
Entry Deterrence ◽  
Cost Advantage ◽  
Cournot Duopoly ◽  
Potential Entrant ◽  
Sequential Game ◽  
Duopoly Model ◽  
Costs Of Production ◽  
Homogeneous Good ◽  
Duopoly Market

Abstract In a homogeneous good, Cournot duopoly model, entry may occur even when the potential entrant has no cost advantage and no independent access to distribution. By sinking its costs of production before negotiating with the incumbents, the entrant creates an externality that induces the incumbents to bid more aggressively for the distribution rights to its output. Each incumbent is willing to pay up to the incremental profit earned from the additional output plus the incremental loss avoided by keeping the output away from its rival. This implies that the incumbents are willing to pay up to the market price for each unit of available output. A sequential game in which the incumbents produce first is analyzed, and the conditions under which entry is deterred by incumbents' preemptive capacity expansions are derived.

Capital Structure and Entry Deterrence with Multiple Incumbents

2007 ◽  
Vol 7 (1) ◽  
Author(s):  
Jorge Antonio Tarzijan
Keyword(s):  
Capital Structure ◽  
Entry Deterrence ◽  
Cournot Duopoly ◽  
Two Stage ◽  
Potential Entrant ◽  
Strategic Actions ◽  
Duopoly Model ◽  
Strategic Role ◽  
Alternative Markets ◽  
A Company

Abstract This paper uses a two-stage Cournot duopoly model with demand uncertainly to examine the strategic role debt plays in deterring a company from entering when a potential entrant can enter one of several markets. We show that as the number of alternative markets available for entry rises, the incumbents' incentive to use debt as a deterrent falls. Thus, a potential entrant will prefer to have a larger number of alternative markets to enter in order to lower the incumbents' incentive to take strategic actions against it.

scholarly journals Strategic trade policy with interlocking cross-ownership

2021 ◽  
Author(s):  
Luciano Fanti ◽  
Domenico Buccella
Keyword(s):  
Trade Policy ◽  
Free Trade ◽  
Strategic Trade Policy ◽  
Cournot Duopoly ◽  
Public Intervention ◽  
Tax Subsidy ◽  
Strategic Trade ◽  
Duopoly Model ◽  
Product Competition ◽  
Cross Ownership

AbstractBy analysing interlocking cross-ownership, this work reconsiders the inefficiency of activist governments that set subsidies for their exporters (Brander and Spencer, J Int Econ 18:83–100). Making use of a third-market Cournot duopoly model, we show that the implementation of strategic trade policy in the form of a tax (subsidy) when goods are differentiated (complements) is Pareto-superior to free trade within precise ranges of firms’ cross-ownership, richly depending on the degree of product competition. These results challenge the conventional ones in which public intervention (1) is always the provision of a subsidy and (2) always leads to a Pareto-inferior (resp. Pareto-superior) equilibrium when products are substitutes (resp. complements).

scholarly journals The Chaos Dynamic of Multiproduct Cournot Duopoly Game with Managerial Delegation

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Fang Wu ◽  
Junhai Ma
Keyword(s):  
Flip Bifurcation ◽  
Cournot Duopoly ◽  
Oligopoly Theory ◽  
Output Fluctuations ◽  
Duopoly Model ◽  
High Volatility ◽  
Route To Chaos ◽  
Barrier To Entry ◽  
Intermittent Chaos ◽  
Consumer Tastes

Although oligopoly theory is generally concerned with the single-product firm, what is true in the real word is that most of the firms offer multiproducts rather than single products in order to obtain cost-saving advantages, cater for the diversity of consumer tastes, and provide a barrier to entry. We develop a dynamical multiproduct Cournot duopoly model in discrete time, where each firm has an owner who delegates the output decision to a manager. The principle of decision-making is bounded rational. And each firm has a nonlinear total cost function due to the multiproduct framework. The Cournot Nash equilibrium and the local stability are investigated. The tangential bifurcation and intermittent chaos are reported by numerical simulations. The results show that high output adjustment speed can lead to output fluctuations which are characterized by phases of low volatility with small output changes and phases of high volatility with large output changes. The intermittent route to chaos of Flip bifurcation and another intermittent route of Flip bifurcation which contains Hopf bifurcation can exist in the system. The study can improve our understanding of intermittent chaos frequently observed in oligopoly economy.

scholarly journals On the ratio of “gift” to “gift-giving” categories

2019 ◽  
pp. 79-84
Author(s):  
V. O. Riadinska ◽  
Yu. O. Kostenko
Keyword(s):  
Market Price ◽  
Civil Code ◽  
Gift Giving ◽  
Economic Costs ◽  
The Gift ◽  
Costs Of Production ◽  
The Relationship

The article analyzes the relationship between the concepts of “gift” and “gift-giving” as categories of modern legislation of Ukraine. It is noted that although the etymological meaning of the words “gift” and “giftgiving” is equal, the legislator uses these concepts as different categories; in various normative acts either gives them different definitions or operates with these two categories as synonyms. Comparing the signs of a gift and a gift-giving, it is determined that a gift can be provided both free of charge and for a fee, but at a price lower than the minimum market price. In the context of gift and gift-giving features, the ratios of “minimum market price” and “symbolic amount” are investigated. It is justified that the minimum market price is less than the market price, but it takes into account the economic costs of production and sale of goods and the minimum profit, while the symbolic price is formed by the prevailing in the society and concerns the free transfer of things. The ratio of “gift” and “gift-giving” categories in the civil and anticorruption legislation is formulated and its features are defined: 1) the concept of “gift-giving” (Civil Code of Ukraine) is narrower than the concept of “gift” (Law of Ukraine “On Prevention of Corruption”); 2) the main feature of giving is that the gift is free of charge, and the “gift” may be given at a price lower than the minimum market price, while the “symbolic fee” is a category that differs from the category of “price lower than the minimum market price”; 3) the decision to accept “gift-giving” depends on the person who is being presented, but the special subject can accept “gift” only if he or she is permitted by the anti-corruption legislation and is obliged to refuse it and implement a set of appropriate measures in case he or she is prohibited or restricted; 4) the categories “gift-giving” and “gift” are not identical, but when a special subject receives “gifts” from close people, they are “gift-giving”. Keywords: gift, gift-giving, anti-corruption legislation, special subject, minimum market price.

scholarly journals Horizontal Coalition Stability Analysis of Supply Chain Entities Based on Sequential Game

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Shizhao Wang ◽  
Yong Luo
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Market Price ◽  
Sensitivity Coefficient ◽  
Game Model ◽  
Nash Game ◽  
Sequential Game ◽  
Second Stage ◽  
Coalition Stability ◽  
Reasonable Range

Aiming to find the effect of the same status entities’ horizontal coordination on supply chain, this paper studied the coalition stability of dealers in a two-stage supply chain with one supplier and multiple dealers. First, a vertical sequential game model is built, where the supplier is leader and the multiple dealers are followers. In the second stage of the game, multiple dealers face two selections: playing Nash game with each other or developing a coalition. Then, according to the results acquired by comparing the dealers’ profits which depend on their coalition situations, the criterion of coalition stability is developed. Finally, numerical simulation is used to verify the validity of the model, and some insights are obtained. For example, if the sensitivity coefficientTof the market price is fixed, dealers’ coalition tends to be stable with the increasing of the substitution ratekin a reasonable range; the supplier’s optimal wholesale price is constant with and without dealer’s coalition, but dealers’ coalition causes demand to decrease, which leads to the decrease of the supplier’s profit too. The result of this paper provides an important reference for the formation of dealers’ coalition in IT or automobile supply chain.

scholarly journals Nonlinear Phenomena in Cournot Duopoly Model

Systems ◽  
2018 ◽  
Vol 6 (3) ◽  
pp. 30
Author(s):  
Pavel Pražák ◽  
Jaroslav Kovárník
Keyword(s):  
Demand Function ◽  
Deterministic Chaos ◽  
Linear Functions ◽  
Nonlinear Phenomena ◽  
Cournot Duopoly ◽  
Limit Values ◽  
Economic Agents ◽  
Duopoly Model ◽  
Sensitive Dependence ◽  
Stackelberg Duopoly

The economic world is very dynamic, and most phenomena appearing in this world are mutually interconnected. These connections may result in the emergence of nonlinear relationships among economic agents. Research discussions about different markets’ structures cannot be considered as finished yet. Even such a well-known concept as oligopoly can be described with different models applying diverse assumptions and using various values of parameters; for example, the Cournot duopoly game, Bertrand duopoly game or Stackelberg duopoly game can be and are used. These models usually assume linear functions and make analyses of the behavior of the two companies. The aim of this paper is to consider a nonlinear inverse demand function in the Cournot duopoly model. Supposing there is a sufficiently large proportion among the costs of the two companies, we can possibly detect nonlinear phenomena such as bifurcation of limit values of production or deterministic chaos. To prove a sensitive dependence on the initial condition, which accompanies deterministic chaos, the concept of Lyapunov exponents is used. We also point out the fact that even though some particular values of parameters are irrelevant for the above-mentioned nonlinear phenomena, it is worth being aware of their existence.

Aspiration-Based Learning in a Cournot Duopoly Model

2013 ◽  
Vol 10 (2) ◽  
pp. 295-314 ◽  
Author(s):  
Manahan Siallagan ◽  
Hiroshi Deguchi ◽  
Manabu Ichikawa
Keyword(s):  
Cournot Duopoly ◽  
Duopoly Model

scholarly journals A Dynamic Duopoly Model: When a Firm Shares the Market with Certain Profit

Mathematics ◽  
2020 ◽  
Vol 8 (10) ◽  
pp. 1826
Author(s):  
Sameh S. Askar
Keyword(s):  
Equilibrium Point ◽  
Market Share ◽  
Period Doubling ◽  
Analytical Investigation ◽  
Basins Of Attraction ◽  
Stability Conditions ◽  
Cournot Duopoly ◽  
Demand Functions ◽  
Duopoly Model ◽  
Dynamic Duopoly

The current paper analyzes a competition of the Cournot duopoly game whose players (firms) are heterogeneous in a market with isoelastic demand functions and linear costs. The first firm adopts a rationally-based gradient mechanism while the second one chooses to share the market with certain profit in order to update its production. It trades off between profit and market share maximization. The equilibrium point of the proposed game is calculated and its stability conditions are investigated. Our studies show that the equilibrium point becomes unstable through period doubling and Neimark–Sacker bifurcation. Furthermore, the map describing the proposed game is nonlinear and noninvertible which lead to several stable attractors. As in literature, we have provided an analytical investigation of the map’s basins of attraction that includes lobes regions.

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