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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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.
|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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