Article ID: | iaor20101109 |
Volume: | 12 |
Issue: | 1 |
Start Page Number: | 140 |
End Page Number: | 161 |
Publication Date: | Dec 2010 |
Journal: | Manufacturing & Service Operations Management |
Authors: | Tunca Tunay I, Porteus Evan L, Shin Hyoduk |
Keywords: | competitive strategy, pricing |
Two single-product firms with different quality levels and fixed limited capacities engage in sequential price competition in an essentially deterministic model where customers have heterogeneous valuations for both products. We develop conditions under which the leader (she) can take strategic advantage of her limited capacity by pricing relatively low, purposefully creating shortages and leaving some