skip to content

Faculty of Economics

Journal Cover

Toxvaerd, F.M.O.

Dynamic Limit Pricing

The RAND Journal of Economics

Vol. 48(1) pp. 281-306 (2017)

Abstract: I study a multiperiod model of limit pricing under one-sided incomplete information. I characterize pooling and separating equilibria and their existence and determine when these involve limit pricing. For some parameter constellations, the unique equilibrium surviving a D1 type refinement involves immediate separation on monopoly prices. For others, there are limit price equilibria surviving the refinement in which different types may initially pool and then (possibly) separate. Separation involves setting prices such that the inefficient incumbent's profits from mimicking are negative. As the horizon increases or as firms become more patient, limit pricing becomes increasingly difficult to sustain in equilibrium.

Author links: Flavio Toxvaerd  

Publisher's Link: http://onlinelibrary.wiley.com/doi/10.1111/1756-2171.12176/full

Open Access Full Text: https://www.repository.cam.ac.uk/handle/1810/261550



Papers and Publications



Recent Publications


Ambrus, A. and Elliott, M. Investments in Social Ties, Risk Sharing, and Inequality Review of Economic Studies [2020]

Fruehwirth, J., Iyer, S. and Zhang, A. Religion and Depression in Adolescence Journal of Political Economy [2019]

Chen, C. Y.-H., Klochkov, Y. and Härdle, W. K. SONIC: SOcial Network analysis with Influencers and Communities Journal of Econometrics, forthcoming [2021]

Linton, O. and Wu, J. A Coupled Component DCS GARCH Model for Intraday and Overnight Volatility Journal of Econometrics [2020]