Amir, Rabah
Stepanova, Anna
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 assumptions. We show that a firmwith 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. This yields sequential play with the low-cost firm as leader as the unique equilibrium outcome.
Bibliographic reference |
Amir, Rabah ; Stepanova, Anna. Second-mover advantage and price leadership in Bertrand oligopoly. ECON Discussion Papers ; 2004/68 (2004) |
Permanent URL |
http://hdl.handle.net/2078.1/4766 |