Higher order lags in price-adjusting oligopoly |
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Authors: | Lambert Schoonbeek |
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Institution: | (1) Department of Econometrics, University of Groningen, 9700 AV Groningen, The Netherlands |
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Abstract: | Summary We consider price-adjusting oligopoly models involving Bertrand or adaptive expectations concerning the rivals' prices. Traditionally, one specifies these models with first order exponential adjustment lags. We introduce specific higher order exponential lags in both models, which provides a more flexible and richer dynamic specification. We show that in both cases the model with higher order lags is stable if and only if the model with first order lags is stable.An anonymous referee is gratefully acknowledged for useful comments. |
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