Dynamic demand and noncompetitive intertemporal output adjustments

B-Tier
Journal: International Journal of Industrial Organization
Year: 2010
Volume: 28
Issue: 3
Pages: 220-229

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper integrates dynamics on the demand and on the supply side, which are characteristic for many goods, in particular fuels, due to costly adjustments. Furthermore, firms often pursue a quantity strategy and decide on output adjustments, additional capacities, etc. instead of fixing prices, e.g., OPEC moved from posting prices to adjusting output in 1986. This paper provides a corresponding framework (surprisingly ignored in the literature) and derives intertemporal market equilibria: cooperative, and noncooperative in open loop and in Markov strategies. The equilibrium in Markov strategies is different, mostly opposite to the much discussed sticky price models, the qualitative properties are non-trivial and some of them are even surprising, e.g., increased demand sluggishness can raise supply.

Technical Details

RePEc Handle
repec:eee:indorg:v:28:y:2010:i:3:p:220-229
Journal Field
Industrial Organization
Author Count
1
Added to Database
2026-01-29