Stability Analysis in a Bertrand Duopoly with Different Product Quality and Heterogeneous Expectations

Luciano Fanti and Luca Gori ()

Journal of Industry, Competition and Trade, 2013, vol. 13, issue 4, 501 pages

Abstract: We study the local stability properties of a nonlinear Bertrand duopoly with vertical differentiation and heterogeneous players under the hypotheses of both covered and uncovered markets. In the former case, the unique pure strategy Nash equilibrium can undergo a flip bifurcation when the extent of consumer’s heterogeneity increases. In the latter, the quality differential determines the stability of prices over time. Numerical evidence is provided to show the occurrence of endogenous fluctuations. Copyright Springer Science+Business Media New York 2013

Keywords: bifurcation; duopoly; heterogeneous expectations; price competition; vertical differentiation; C62; D43; L13; L15 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Working Paper: Stability analysis in a Bertrand duopoly with different product quality and heterogeneous expectations (2011)
Working Paper: Stability analysis in a Bertrand duopoly with different product quality and heterogeneous expectations (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jincot:v:13:y:2013:i:4:p:481-501

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DOI: 10.1007/s10842-012-0134-9

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