Differentiated Entry or “Me-Too” Entry in Bertrand and Cournot Oligopoly

James Brander and Barbara Spencer

Review of Industrial Organization, 2022, vol. 60, issue 1, No 1, 27 pages

Abstract: Abstract When would an oligopolistic entrant imitate an incumbent’s product (“me-too” entry), rather than horizontally differentiate? We allow an entrant's product choice to vary endogenously with the cost of product differentiation. Such endogenity of product differentiation significantly affects the comparison of Bertrand and Cournot duopoly. We find that if Bertrand entry occurs, products are differentiated, whereas there is a substantial region in which Cournot entry involves a homogenous product. Bertrand prices may be higher than Cournot prices; and, if product differentiation costs are low enough to induce Cournot differentiated entry, then Bertrand industry profit equals or exceeds Cournot industry profit.

Keywords: Bertrand; Cournot; Entry; Horizontal product differentiation; Me-too products (search for similar items in EconPapers)
JEL-codes: D4 L1 L13 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11151-021-09822-1 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:revind:v:60:y:2022:i:1:d:10.1007_s11151-021-09822-1

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11151/PS2

DOI: 10.1007/s11151-021-09822-1

Access Statistics for this article

Review of Industrial Organization is currently edited by L.J. White

More articles in Review of Industrial Organization from Springer, The Industrial Organization Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().