Price competition with capacity uncertainty - feasting on leftovers

Somogyi, Róbert; Vergote, Wouter; Virág, Gábor

doi:10.1016/j.geb.2023.03.010

Cited by 2 publications

(2 citation statements)

References 26 publications

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“…16 https://www.nytimes.com/2021/07/17/world/middleeast/suez-canal-stuck-ship-ever-given.html and https://www.economist.com/blogs/ gulliver/2017/09/pilot-light Both links accessed on January 16, 2023. 17 See, for example, Acemoglu et al (2009), de Frutos and Fabra (2011), Garcia et al (2023), Hunold and Muthers (2019b), Lemus and Moreno (2017), Möller and Watanabe (2010), Moreno and Ubeda (2006), Nocke and Peitz (2007), and Somogyi et al (2023).…”

Section: Endnotesmentioning

confidence: 99%

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Monopoly pricing with dual‐capacity constraints

Somogyi

2023

Economics Manag Strategy

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This paper studies the price‐setting behavior of a monopoly facing two capacity constraints: one on the number of its consumers, and the other on the amount of products it can sell. The characterization of the firm's optimal pricing and optimal customer mix as a function of its two capacities reveals a rich structure. In contrast to the results under one‐dimensional capacity constraints with constant marginal cost of production, a firm may optimally respond to an exogenous reduction in one of its capacities by decreasing one of its prices. Moreover, neglecting the existence of the second capacity constraint can reverse some policy interventions' effects on consumer welfare. In particular, easing a regulatory restriction on one of the constraints may harm the average consumer.

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Section: Endnotesmentioning

confidence: 99%

“…1 Recent contributions include Cabon-Dhersin and Drouhin (2020), Fabra and Llobet (2023), Hunold and Muthers (2019a), Lemus and Moreno (2017), Montez and Schutz (2021), Somogyi (2020), andSomogyi et al (2023).…”

Section: Endnotesmentioning

confidence: 99%