In recent applications of discrete choice models of labour supply considerable attention has been devoted to strategies to increase the flexibility of models for a better fit to the data. These include the introduction of random parameters, fixed cost of work or flexible functional forms of...

This paper analyzes price competition between market makers who set costly capacity constraints before they intermediate between producers and consumers. The key finding is that the unique perfect equilibrium outcome is Cournot if capacity is costly and rationing efficient. This result is...