Dynamic oligopoly with sticky prices: closed-loop, feedback, and open-loop solutions. (English) Zbl 1070.91006
Summary: We investigate a dynamic oligopoly game with price adjustments. We show that the subgame perfect equilibria are characterized by larger output and lower price levels than the open-loop solution. The individual (and industry) output at the closed-loop equilibrium is larger than its counterpart at the feedback equilibrium. Therefore, firms prefer the open-loop equilibrium to the feedback equilibrium, and the latter to the closed-loop equilibrium. The opposite applies to consumers.
MSC:
91A23 | Differential games (aspects of game theory) |
49N70 | Differential games and control |
91B24 | Microeconomic theory (price theory and economic markets) |