Optimal Punishments in Linear Duopoly Supergames with Product Differentiation

Lambertini, Luca ; Sasaki, Dan (1998) Optimal Punishments in Linear Duopoly Supergames with Product Differentiation. DOI 10.6092/unibo/amsacta/742.
Full text available as:
[img]
Preview
PDF
Download (175kB) | Preview

Abstract

We analyse optimal penal codes in both Bertrand and Cournot supergames with product differentiation. We prove that the relationship between optimal punishments and the security level (individually rational discounted profit stream) depends critically on the degree of supermodularity in the stage game, using a linear duopoly supergame with product differentiation. The security level in the punishment phase is reached only under extreme supermodularity, i.e., when products are perfect substitutes and firms are price setters. Finally, we show that Abreu's rule cannot be implemented under Cournot behaviour and strong demand complementarity between products.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Sasaki, Dan
Keywords
penal codes security level product differentiation positivity constraints
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:03
URI

Other metadata

Downloads

Downloads

Staff only: View the document

^