First and Second Mover Advantage in Asymmetric Price Duopoly

Rabah AMIR and Anna Stepanova

No 1161, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: We consider the issue of first versus second mover advantage in differentiated-product Bertrand duopoly with asymmetric linear costs. We provide a generalization of some well-known results in the cases where prices are strategic substitutes or complements, dispensing with extraneous assumptions of single-valued optimal reactions, uniqueness of Bertrand equilibrium, ... We also consider a new mixed case. Our approach is based on the theory of supermodular optimization/games. Furthermore, we show that even when prices are strategic complemnts, one firm may have a first mover advantage under a linear demand.

Date: 2000-08-01
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