Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/40654
Authors: 
Pasini, Giacomo
Pin, Paolo
Weidenholzer, Simon
Year of Publication: 
2008
Series/Report no.: 
Nota di lavoro // Fondazione Eni Enrico Mattei: CTN, Coalition theory network 2008,28
Abstract: 
We analyze a model of price competition á la Bertrand in a network environment. Firms only have a limited information on the structure of network: they know the number of potential customers they can attract and the degree distribution of customers. This incomplete information framework stimulates the use of Bayesian-Nash equilibrium. We find that, if there are customers only linked to one firm, but not all of them are, then an equilibrium in randomized strategies fails to exist. Instead, we find a symmetric equilibrium in randomized strategies. Finally, we test our results on US gasoline data. We find empirical evidence consistent with firms playing random strategies.
Subjects: 
Bertrand Competition
Bayesian- Nash Equilibrium
Mobility Index
JEL: 
D43
D85
L11
Document Type: 
Working Paper

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