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Frontiers of Economics in China

Front. Econ. China    2019, Vol. 14 Issue (2) : 203-219
Orginal Article
Kreps & Scheinkman with Product Differentiation
Stephen Martin()
Department of Economics, Purdue University, West Lafayette, IN 47906, USA
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Kreps and Scheinkman (1983)’s celebrated result is that in a two-stage model of a market with homogeneous products in which firms noncooperatively pick capacities in the first stage and set prices in the second stage, the equilibrium outcome is that of a one-shot Cournot game. This note derives capacity best response functions for the first stage and extends the Kreps and Scheinkman result to the case of differentiated products.

Keywords Kreps and Scheinkman      capacity choice      Cournot      oligopoly      product differentiation     
Issue Date: 17 July 2019
 Cite this article:   
Stephen Martin. Kreps & Scheinkman with Product Differentiation[J]. Front. Econ. China, 2019, 14(2): 203-219.
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