Elastic Demand, Sunk Costs and the Kreps-Scheinkman Extension of the Cournot Model

Economic Theory, Vol. 12, Issue 1, 1998

Posted: 1 Oct 1998

See all articles by Paul Madden

Paul Madden

The University of Manchester - School of Social Sciences

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

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

Paul Madden (Contact Author)

The University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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