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On the Dynamic Analysis of Cournot–Bertrand Equilibria

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  • Semenov, Aggey
  • Tondji, Jean-Baptiste

Abstract

We consider a setting where firms in the first stage invest in cost-reducing R&D. In the market stage, one firm sets a quantity, and another sets a price. We prove that the quantity-setting firm invests more in R&D, has a lower price, and produces higher quantity than the price-setting firm. We also consider welfare implications.

Suggested Citation

  • Semenov, Aggey & Tondji, Jean-Baptiste, 2019. "On the Dynamic Analysis of Cournot–Bertrand Equilibria," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    • Handle: RePEc:eee:ecolet:v:183:y:2019:i:c:30
    DOI: 10.1016/j.econlet.2019.108549
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    References listed on IDEAS

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    1. Victor J. Tremblay & Carol Horton Tremblay & Kosin Isariyawongse, 2013. "Cournot and Bertrand Competition when Advertising Rotates Demand: The Case of Honda and Scion," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(1), pages 125-141, February.
    2. David Flath, 2012. "Are There Any Cournot Industries in Japan?," Japanese Economy, Taylor & Francis Journals, vol. 39(2), pages 3-36.
    3. Qiu, Larry D., 1997. "On the Dynamic Efficiency of Bertrand and Cournot Equilibria," Journal of Economic Theory, Elsevier, vol. 75(1), pages 213-229, July.
    4. Paul Klemperer & Margaret Meyer, 1986. "Price Competition vs. Quantity Competition: The Role of Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 618-638, Winter.
    5. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    6. Tremblay, Carol Horton & Tremblay, Victor J., 2011. "The Cournot-Bertrand model and the degree of product differentiation," Economics Letters, Elsevier, vol. 111(3), pages 233-235, June.
    7. TAKASHI Sato, 1996. "On Cournot-Bertrand Mixed Duopolies," The Japanese Economic Review, Japanese Economic Association, vol. 47(4), pages 412-420, December.
    8. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, April.
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    Cited by:

    1. Michael Kopel & Eva Maria Putz, 2021. "Information sharing in a Cournot–Bertrand duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1645-1655, October.
    2. Basak, Debasmita, 2021. "Cournot-Bertrand equilibria under two-part tariff contract," MPRA Paper 109588, University Library of Munich, Germany.
    3. Jean‐Baptiste Tondji, 2022. "Overconfidence and welfare in a differentiated duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 751-767, April.

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    More about this item

    Keywords

    Cournot–Bertrand model; Product differentiation; R&D; Welfare;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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