Template-Type: ReDIF-Paper 1.0
Title: Oligopoly, Complementarities, and Transformed Potentials
Author-Name: Volker Nocke
Author-Email: volker.nocke@gmail.com
Author-Name: Nicolas Schutz
Author-Email: schutz@uni-mannheim.de
Classification-JEL: L13, D43
Keywords: Multiproduct firms, potential game, oligopoly pricing, IIA demand, complementary goods

Abstract: We adopt a potential games approach to study multiproduct-firm pricing games where products can be local complements or substitutes. We show that any such game based on an IIA
demand system admits an ordinal potential, giving rise to a simple proof of equilibrium existence. We introduce the concept of transformed potential, and characterize the class of
demand systems that give rise to multiproduct-firm pricing games admitting such a potential, as well as the associated transformation functions. The resulting demand systems allow for
substitutability or complementarity patterns that go beyond IIA, and can resemble those induced by "one-stop shopping" behavior.


Note: 
Length: 37
Creation-Date: 2025-02
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp644
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_644