Equilibria in a dynamic model of two firms coordination with non-fixed prices

Abstract

Model of 2 companies' interaction is considered. Companies exchange two kinds of goods with each other. These goods also can be selled on the market. Prices of goods change over time. Interation is modelled by positional game which is similar to Rosental's Centipede game. Conditions for a contract beetween companies are found. For these conditions, companies can't violate a contract because it is unprofitable for them. Such conditions are modelled by Nash equilibriua in a positional game. We found that sufficient conditions for contract: it renews each 2 points of time; each company pays rather big fine if it refused to transfer good to another company.