Kreps &amp; Scheinkman with Product Differentiation

Stephen Martin

doi:10.3868/s060-008-019-0011-4

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Front. Econ. China ›› 2019, Vol. 14 ›› Issue (2) : 203-219. DOI: 10.3868/s060-008-019-0011-4

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Kreps & Scheinkman with Product Differentiation

Stephen Martin

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Abstract

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.

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Kreps and Scheinkman / capacity choice / Cournot / oligopoly / product differentiation

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Stephen Martin. Kreps & Scheinkman with Product Differentiation. Front. Econ. China, 2019, 14(2): 203‒219 https://doi.org/10.3868/s060-008-019-0011-4