Asymmetric dynamic price competition with uncertainty

Abstract

We consider a dynamic setting‐price duopoly model in which a dominant (leader) firm moves first and a subordinate (follower) firm moves second. We suppose that each firm has two different technologies, and uses one of them according to a certain probability distribution. The use of either one or the other technology affects the unitary production cost. We analyse the effect of the production costs uncertainty on the profits of the firms, for different values of the intercept demand parameters. (© 2008 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)