First-Mover and Second-Mover Advantages in a Bilateral Duopoly

DongJoon Lee, Kangsik Choi and Kyuchan Hwang
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DongJoon Lee: Nagoya University of Commerce and Business
Kangsik Choi: Pusan National University
Kyuchan Hwang: Tokai Gakuen University

Korean Economic Review, 2017, vol. 33, 35-53

Abstract: This study examines a first-mover and a second-mover advantage in a vertical structure in which each upstream firm trades with an exclusive retailer and downstream retailers move sequentially. We provide two main claims. One is that, in Cournot (Bertrand) competition, the leader’s upstream firm sets the input price equal to its marginal cost (equal to its marginal cost), while the follower’s upstream firm sets the input price below its marginal cost (above its marginal cost). The other is that the follower’s (leader’s) upstream firm enjoys higher profits than the leader’s (follower’s) upstream firm in Cournot (Bertrand) competition.

Keywords: First- and Second-mover Advantage; Two-part Tariffs; Vertical Structure (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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