Second-Mover Advantage and Price Leadership in Bertrand Duopoly

Rabah AMIR and Anna Stepanova

No 2000-10, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: We consider the issues of endogenous timing and first versus second-mover advantage in differentiated-product Bertrand duopoly with asymmetric linear costs. First, we provide a thorough set of results in the cases where prices are either strategic substitutes and/or complements, dispensing with some common extraneous assumptions. Second, with linear demand for substitute goods, the scope for second-mover advantage crucially depends on the unit cost difference. A natural endogenous timing scheme coupled with equilibrium selection according to risk-dominance yields a unique outcome with the low-cost firm as leader.

Keywords: price competition; endogenous timing; second-mover advantage; risk dominance (search for similar items in EconPapers)
JEL-codes: L13 C72 (search for similar items in EconPapers)
Date: 2000-12
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Related works:
Working Paper: Second-mover advantage and price leadership in Bertrand duopoly (2004)
Journal Article: Second-mover advantage and price leadership in Bertrand duopoly (2006)
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