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Watanabe, M. and Moller, M. (2016). Competition in the presence of individual demand uncertainty RAND Journal of Economics, 47(2):273--292.

  • Affiliated author
    Makoto Watanabe
  • Publication year
    2016
  • Journal
    RAND Journal of Economics
View publication

This article offers a tractable model of (oligopolistic) competition in differentiated product markets characterized by individual demand uncertainty. The main result shows that, in equilibrium, firms offer advance purchase discounts and that these discounts are larger than in the monopolistic benchmark. Competition reduces welfare by increasing the fraction of consumers who purchase in advance, that is, without (full) knowledge of their preferences.