Elastic Demand, Sunk Costs and the Kreps-Scheinkman Extension of the Cournot Model
Economic Theory, Vol. 12, Issue 1, 1998
Posted: 1 Oct 1998
Abstract
The paper shows that, with any rationing mechanism between the efficient and proportional extremes, the Kreps-Scheinkman two-stage quantity-price game reduces to the Cournot model if demand is uniformly elastic and if all costs are sunk at the first stage, thus providing positive results to set against existing negative statements.
JEL Classification: C72, D43, L13
Suggested Citation: Suggested Citation
Madden, Paul, Elastic Demand, Sunk Costs and the Kreps-Scheinkman Extension of the Cournot Model. Economic Theory, Vol. 12, Issue 1, 1998, Available at SSRN: https://ssrn.com/abstract=113668
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