Price setting and competition in a simple duopoly model

Douglas Gale

    Research output: Contribution to journalArticle


    The paper studies a market in which there are two sellers and one buyer. Each agent wants to trade at most one unit of an indivisible commodity. The sellers are uncertain whether the buyer is receiving offers from one or both of them at any given time. This model induces competitive and monopolistic outcomes for particular parameter values. But, other things being equal, as the buyer becomes very patient, the equilibrium price converges to the competitive one.

    Original languageEnglish (US)
    Pages (from-to)729-739
    Number of pages11
    JournalQuarterly Journal of Economics
    Issue number4
    StatePublished - Nov 1988


    ASJC Scopus subject areas

    • Economics and Econometrics

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