Abstract
AbstractWe determine the endogenous order of moves in which the firms set their prices in the framework of a capacity‐constrained Bertrand–Edgeworth triopoly. A three‐period timing game that determines the period in which the firms announce their prices precedes the price‐setting stage. We show that the firm with the largest capacity sets its price first, while the two other firms set their prices later. Our result extends a finding by Deneckere and Kovenock from duopolies to triopolies. This extension was made possible by Hirata's recent advancements on the mixed‐strategy equilibria of Bertrand–Edgeworth games.
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