Profit loss in differentiated oligopolies

Authors:
Amr Farahat;Georgia Perakis
Affiliations:
Johnson Graduate School of Management, Cornell University, Ithaca, NY 14853, USA;Sloan School of Management, M.I.T., Cambridge, MA 02139, USA
Venue:
Operations Research Letters
Year:
2009

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Abstract

We provide sharp lower and upper bounds on the ratio of decentralized to centralized profits when multiproduct firms offering differentiated products engage in price competition. The bounds depend on the demand sensitivity matrix but are independent of marginal costs.