Journal article
Second-mover advantage and price leadership in Bertrand duopoly
Games and economic behavior, Vol.55(1), pp.1-20
04/01/2006
DOI: 10.1016/j.geb.2005.03.004
Abstract
We consider the issue of first- versus second-mover advantage in differentiated-product Bertrand duopoly with general demand and asymmetric linear costs. We generalize existing results for all possible combinations where prices are either strategic substitutes and/or complements, dispensing with common extraneous and restrictive assumptions. We show that a firm with a sufficiently large cost lead over its rival has a first-mover advantage. For the linear version of the model, we invoke a natural endogenous timing scheme coupled with equilibrium selection according to risk dominance. The analysis yields, as the unique equilibrium outcome, sequential play with the low-cost firm as leader.
Details
- Title: Subtitle
- Second-mover advantage and price leadership in Bertrand duopoly
- Creators
- Rabah Amir - University of ArizonaAnna Stepanova - University of Southern Denmark
- Resource Type
- Journal article
- Publication Details
- Games and economic behavior, Vol.55(1), pp.1-20
- Publisher
- Elsevier Inc
- DOI
- 10.1016/j.geb.2005.03.004
- ISSN
- 0899-8256
- eISSN
- 1090-2473
- Language
- English
- Date published
- 04/01/2006
- Academic Unit
- Economics
- Record Identifier
- 9984380472202771
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