A Hybrid Equilibrium in Segmented Markets: The 3-Firm Case

  1. Rodríguez-Ibeas, R. 1
  1. 1 Universidad de La Rioja
    info

    Universidad de La Rioja

    Logroño, España

    ROR https://ror.org/0553yr311

Journal:
Journal of Economics

ISSN: 0931-8658

Year of publication: 2000

Volume: 72

Issue: 1

Pages: 81-97

Type: Article

DOI: 10.1007/BF01231490 SCOPUS: 2-s2.0-0034364504 WoS: WOS:000165098600005 GOOGLE SCHOLAR

More publications in: Journal of Economics

Institutional repository: lock_openOpen access Editor

Abstract

In this paper, we characterize two hybrid equilibria for the three-firm case in segmented markets in which consumers not only value the product itself but also the environment within which the consumption takes place. In equilibrium, the firm with the larger population of loyal consumers chooses the monopoly price while the remaining two firms play a mixed strategy. In the duopoly case, the unique equilibrium is in mixed strategies and no firm focuses only on its loyal consumers.