Committed versus Contingent Pricing under Competition

摘要: Should capacitated firms set prices responsively to uncertain market conditions in a competitive environment? We study duopoly selling differentiated substitutable products with fixed capacities under demand uncertainty, where can either commit price ex ante, or elect contingently post, e.g., charge high booming markets, and low slack markets. Interestingly, we analytically show that even for completely symmetric model primitives, asymmetric equilibria of strategic pricing decisions may arise, which one firm commits statically the other contingently; this case, there also exists unique mixed strategy equilibrium. Such equilibrium behavior tends emerge, when capacity is ampler, are less uncertainty lower. With capacities, if low, emerges, more chooses committed contingent pricing. identify two countervailing profit effects competition: gains from charging demand, losses intensified competition demand. It latter detrimental effect prevent both choosing caution responsive changes aggressive result profit-killing discounting. our results remain valid endogenized.