Abstract
In the present study, we propose a novel game-theoretic pricing model describing the interaction between producers and retailers of goods in conditions of poor transport infrastructure and sparse geographical distribution of the points of sale. The proposed model generalizes the Stackelberg leadership model for an arbitrary number of leaders and followers. We show that the model always has a Nash and Stackelberg equilibria. We also provide formulas for the equilibrium prices and volume of sales. As an example we model diesel pricing in south Siberia. Our model found no signs of a cartel. The results of this paper can be used by policymakers to inform market regulations aimed at promoting free competition and avoiding monopolies in production and retail of goods.
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