A General Model of Price Competition with Soft Capacity Constraints

In this paper, the market of software products is considered. Regularly this market is suffering from existence of counterfeit or pirate products which causes problems and challenges for original software developers. Taking this fact into account the paper is trying to solve the problem of price competition on this market. The software company set the price and the quality of the software product while the counterfeit or pirate company suggests the consumers the product of the lower quality. First the general model is analyzed and price equilibrium is defined. Second, the monopoly case is considered separately and optimal software price is defined. Finally, it is supposed that there are two companies that produce original software on the market who compete and differentiate in product quality, and there are two pirate companies who produce the same type of software. The duopoly case is analyzed and equilibrium prices for competing companies are obtained in the explicit form.

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Tacit Collusion in a One-Shot Game of Price Competition with Soft Capacity Constraints

Journal of Economics & Management Strategy ◽

10.1111/jems.12049 ◽

2014 ◽

Vol 23 (2) ◽

pp. 427-442 ◽

Cited By ~ 7

Author(s):

Marie-Laure Cabon-Dhersin ◽

Nicolas Drouhin

Keyword(s):

Price Competition ◽

Capacity Constraints ◽

Tacit Collusion

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DYNAMIC PRICE COMPETITION WITH CAPACITY CONSTRAINTS AND A STRATEGIC BUYER

International Economic Review ◽

10.1111/iere.12077 ◽

2014 ◽

Vol 55 (3) ◽

pp. 943-958 ◽

Cited By ~ 11

Author(s):

James J. Anton ◽

Gary Biglaiser ◽

Nikolaos Vettas

Keyword(s):

Price Competition ◽

Capacity Constraints ◽

Dynamic Price

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Environmental Taxes in Duopoly with Soft Capacity Constraints

The B E Journal of Economic Analysis & Policy ◽

10.1515/bejeap-2013-0138 ◽

2014 ◽

Vol 14 (4) ◽

pp. 1569-1584

Author(s):

Henrik Vetter

Keyword(s):

Price Competition ◽

Cournot Competition ◽

Capacity Constraints ◽

Environmental Taxes ◽

Bertrand Competition ◽

Environmental Tax ◽

Unit Tax ◽

Qualitative Nature

Abstract This paper examines an environmental tax when duopolistic firms engage in capacity-price competition. Under soft capacity constraints, the equilibrium ranges from Bertrand competition to Cournot competition, depending upon parameters. It is shown that a unit tax potentially changes the qualitative nature of equilibrium. That is, the type of tax affects the mode of competition between firms. This effect gives rise to the result that a unit tax is sometimes an inefficient instrument. The explanation is that the tax that leads to the first-best under Cournot competition will in fact sustain Bertrand competition, and vice versa.

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