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Slot allocation: a model of competition between firms when consumers are procedurally rational

Ray, Indrajit and De Fraja, Gianni 1999. Slot allocation: a model of competition between firms when consumers are procedurally rational. Mathematical Social Sciences 38 (1) , pp. 71-81. 10.1016/S0165-4896(98)00032-8

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Abstract

We present a simple model of competition between firms who face boundedly rational consumers. The consumers cannot compare two consumption bundles; instead, they have some fundamental preferences and a selection procedure. In any Nash equilibrium of the slot allocation game, the firms choose the same allocation. There may be multiple equilibria, one of which is always to allocate according to the consumers' tastes. Finally, as the number of firms increases, only the allocation preferred by the consumers remains as an equilibrium, which may not maximise the industry profit. JEL classification C72; D11; D21; L10.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Uncontrolled Keywords: Bounded rationality; Procedural rationality; Slot allocation; Multiproduct firms; Lexicographic preferences
Publisher: Elsevier
ISSN: 0165-4896
Date of Acceptance: 4 August 1998
Last Modified: 04 Jun 2017 08:50
URI: http://orca-mwe.cf.ac.uk/id/eprint/86074

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