DP3054 Cost of Delay, Deadlines and Endogenous Price Leadership

Author(s):	Tuvana Pastine, Ivan Pastine
Publication Date:	November 2001
Keyword(s):	endogenous timing, price leadership, war of attrition
JEL(s):	L13
Programme Areas:	Industrial Organization
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=3054

This Paper analyses endogenous price leadership in a duopolistic market with differentiated products and symmetrically informed firms. We study the effects of deadlines and discounting in a standard endogenous leadership model. We show that there will be occasional changes in the identity of the price leader with any cost of delay or discounting, however small. By analyzing the incentives that induce a firm to take up the leader position we derive positive predictions about which firm will lead most price changes.