standard financial claims (debt, equity, etc.). We find that when higher demand realizations are more indicative of high effort … demand elicitation effect. Both stem from the risk of unmet demand, which is characteristic of capacity decisions under …

We analyze a two-stage game of strategic firms facing uncertain demand and exerting market power in decentralized … consider various types of such a closed loop model regarding the underlying price-demand relations (elastic and inelastic … demand), the assumed demand uncertainty with a broad class of continuous distributions, and any finite number of players with …

, congestion effects, and pricing based on ex-post realized demand. I show that as long as any one of these ingredients is present …’ expected utility from visiting a specific seller is decreasing in that seller’s realized demand. -- directed search ; Bertrand …

shape competition by investing into production capacity while being subject to unexpected demand shocks with persistence …. The model shows that a negative demand shock can facilitate cartel formation despite lowering collusive profits. This is … because lower demand reduces capacity utilization and makes competition more intense especially when capacities are durable …

who invest into production capacity, sell a near-homogeneous good, and are subject to unexpected demand shocks with … persistence. The firms either compete or collude in prices. The model shows that a reduction of demand may promote collusion … despite lowering collusive profits. This is the case when capacities are durable and a perceptible decline in demand creates …

Uncertainty about the level of demand is thought to influence irreversible capacity decisions. This paper examines some … capacity sufficient to supply positive local demand shocks. In the presence of uncertain demand, firms may choose to serve … the average level of excess capacity and demand volatility only for coastal areas. An increase in demand volatility is …