Abstract:
In this thesis a two-stage capacity, inventory, and pricing game is studied. Two competing vendors make a capacity commitment to invest in the rst stage. This capacity limits how much they can produce in order to meet random demand in the second stage, where they decide on quantities and prices simultaneously. The equilibria are analyzed for both stages of the game. The interaction between rst stage capacity decisions and second stage joint quantity-pricing decisions is explored. The recommended pricing policies are determined for both players. A computational method is pursued in the numerical analysis of how the rst stage capacity decisions impact the second stage equilibria.
