Paper
Capacity Precommitment and Three-Stage Duopoly with Complementary Goods
- Authors:
- Masamichi Kawano; Kazuhiro Ohnishi
- Abstract
- This paper considers a three-stage quantity-setting duopoly model with complementary goods. First, the first-mover firm decides whether or not to make a commitment to capacity. Second, the second-mover firm decides whether or not to make a commitment to capacity. Third, both firms choose their outputs simultaneously and independently. The paper demonstrates that there exist two opposite equilibria, and that at each equilibrium capacity investment is beneficial for both the firms.
- Keywords
- Quantity-setting Model; Complementary Goods; Capacity Investment
- StartPage
- 80
- EndPage
- 84
- Doi