Details
| Original language | English |
|---|---|
| Pages (from-to) | 507-521 |
| Number of pages | 15 |
| Journal | Journal of Evolutionary Economics |
| Volume | 30 |
| Issue number | 2 |
| Early online date | 16 Dec 2019 |
| Publication status | Published - Apr 2020 |
Abstract
Do firms that engage in relative payoff maximizing (RPM) behavior always choose a strategy profile that results in tougher competition compared to firms that engage in absolute payoff maximizing (APM) behavior? We address this question by way of a simple model of symmetric oligopoly where firms simultaneously select a two-dimensional strategy set consisting of a price variable and a non-price (i.e., quality) variable. Our results show that equilibrium solutions of RPM and APM are distinct. It is further shown that the standard result of Nash equilibrium in oligopoly, namely, that the non-price variable is used to soften price competition, survives also when firms are concerned with relative payoff considerations.
Keywords
- Finite population evolutionary stable strategy (FPESS), Oligopoly, Quality, Relative payoff maximizing (RPM)
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- General Business,Management and Accounting
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of Evolutionary Economics, Vol. 30, No. 2, 04.2020, p. 507-521.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Price and non-price competition in an oligopoly
T2 - an analysis of relative payoff maximizers
AU - Markazi Moghadam, Hamed
N1 - Funding Information: The author is grateful to Wolfgang Leininger, Lars Metzger, Marc Escrihuela Villar, and all conference participants at the University of Macedonia, Corvinus University of Budapest, SING11, the European Meeting on Game Theory in St. Petersburg, the China Meeting of the Econometric Society in Wuhan, and XXXII Jornadas de Economia Industrial for helpful comments and suggestions. I particularly thank an anonymous referee whose suggestions made invaluable contributions to my revisions. Financial support from TU Dortmund University and Ruhr Graduate School in Economics is gratefully acknowledged.
PY - 2020/4
Y1 - 2020/4
N2 - Do firms that engage in relative payoff maximizing (RPM) behavior always choose a strategy profile that results in tougher competition compared to firms that engage in absolute payoff maximizing (APM) behavior? We address this question by way of a simple model of symmetric oligopoly where firms simultaneously select a two-dimensional strategy set consisting of a price variable and a non-price (i.e., quality) variable. Our results show that equilibrium solutions of RPM and APM are distinct. It is further shown that the standard result of Nash equilibrium in oligopoly, namely, that the non-price variable is used to soften price competition, survives also when firms are concerned with relative payoff considerations.
AB - Do firms that engage in relative payoff maximizing (RPM) behavior always choose a strategy profile that results in tougher competition compared to firms that engage in absolute payoff maximizing (APM) behavior? We address this question by way of a simple model of symmetric oligopoly where firms simultaneously select a two-dimensional strategy set consisting of a price variable and a non-price (i.e., quality) variable. Our results show that equilibrium solutions of RPM and APM are distinct. It is further shown that the standard result of Nash equilibrium in oligopoly, namely, that the non-price variable is used to soften price competition, survives also when firms are concerned with relative payoff considerations.
KW - Finite population evolutionary stable strategy (FPESS)
KW - Oligopoly
KW - Quality
KW - Relative payoff maximizing (RPM)
UR - http://www.scopus.com/inward/record.url?scp=85076879712&partnerID=8YFLogxK
U2 - 10.1007/s00191-019-00653-8
DO - 10.1007/s00191-019-00653-8
M3 - Article
AN - SCOPUS:85076879712
VL - 30
SP - 507
EP - 521
JO - Journal of Evolutionary Economics
JF - Journal of Evolutionary Economics
SN - 0936-9937
IS - 2
ER -