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On the comparison of price and quantity competition under endogenous timing

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  • Yang, Xiao-hua
  • Luo, Yun-feng
  • Wu, Hui-qiu

Abstract

This paper compares Bertrand and Cournot equilibria in a differentiated duopoly with linear demand, and asymmetric constant marginal cost under endogenous timing. It shows that endogenous timing leads to two sequential play with both leader-follower configurations in Bertrand, but simultaneous play in Cournot. Moreover, every firm's mark-up/output ratio and the two firms' weighted 'average' price are all lower, but the two firms' weighted 'average' output is higher in either of the two sequential Bertrand equilibria than in the simultaneous-move Cournot equilibrium.

Suggested Citation

  • Yang, Xiao-hua & Luo, Yun-feng & Wu, Hui-qiu, 2009. "On the comparison of price and quantity competition under endogenous timing," Research in Economics, Elsevier, vol. 63(1), pages 55-61, March.
    • Handle: RePEc:eee:reecon:v:63:y:2009:i:1:p:55-61
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    References listed on IDEAS

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    1. Amir, Rabah & Stepanova, Anna, 2006. "Second-mover advantage and price leadership in Bertrand duopoly," Games and Economic Behavior, Elsevier, vol. 55(1), pages 1-20, April.
    2. 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.
    3. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
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    5. Amir, Rabah & Jin, Jim Y., 2001. "Cournot and Bertrand equilibria compared: substitutability, complementarity and concavity," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 303-317, March.
    6. Leonard Cheng, 1985. "Comparing Bertrand and Cournot Equilibria: A Geometric Approach," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 146-152, Spring.
    7. 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.
    8. Rabah Amir & Isabel Grilo & Jim Jin, 1999. "Demand-Induced Endogenous Price Leadership," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 1(03n04), pages 219-240.
    9. Lofaro, Andrea, 2002. "On the efficiency of Bertrand and Cournot competition under incomplete information," European Journal of Political Economy, Elsevier, vol. 18(3), pages 561-578, September.
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    Cited by:

    1. Cong Pan, 2015. "Should Brand Firms Always Take Pioneering Position?," ISER Discussion Paper 0938, Institute of Social and Economic Research, Osaka University.
    2. Cong Pan, 2018. "Firms’ timing of production with heterogeneous consumers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1339-1362, November.
    3. Tsuyoshi Toshimitsu, 2017. "Optimal Timing of Advertising with Demand Spillovers," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 43-60, March.

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    Keywords

    Bertrand Cournot Endogenous timing;

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