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Indiana University Bloomington

BEPP

The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

Winner-Take-All Price Competition

2002, Economic Theory

Michael R. Baye, John Morgan

Abstract

We analyze an oligopoly model of homogeneous product price competition that allows for discontinuities in demand and/or costs. Conditions under which only zero profit equilibrium outcomes obtain in such settings are provided.
We then illustrate through a series of examples that the conditions provided are “tight” in the sense that their relaxation leads to positive profit outcomes.

Citation

Michael R. Baye and John Morgan, "Winner-Take-All Price Competition," Economic Theory, Vol. 19 (2002), pp. 271-282.

Keywords

Price competition, Discontinuity, Bertrand, Hotelling