Amir, Rabah and Stepanova, Anna (2006) Second-mover advantage and price leadership in Bertrand duopoly. Games and Economic Behavior, 55 (1). pp. 1-20. ISSN 0899-8256.
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| Official URL http://dx.doi.org/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.
| Item Type: | Article |
|---|---|
| Uncontrolled keywords: | price competition; endogenous timing; first/second-mover advantage; risk dominance |
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculties > Social Sciences > School of Economics |
| Depositing User: | Anna Stepanova |
| Date Deposited: | 11 Jun 2008 17:33 |
| Last Modified: | 13 Jul 2011 13:02 |
| Resource URI: | http://kar.kent.ac.uk/id/eprint/7198 (The current URI for this page, for reference purposes) |
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