Perpetual Leapfrogging in Bertrand Duopoly

Emanuele Giovannetti

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We consider different patterns of infinite technological adoption choices by firms in a Bertran duopoly. Every period, technological progress provides a sequence of cost reducing innovations. The equilibrium concept is Markov Perfect Equilibrium. We analyse conditions for which equilibrium adoption leads to persistent leadership and those where firms alternate in adoption inducing leapfrogging. Only leapfrogging leads to technological improvement in the long run. Demand conditions play a crucial role in determining whether leapfrogging can be perpetual in Bertrand duopoly.

Keywords: Strategic technology adoption; Leapfrogging; Markov perfect equilibrium (search for similar items in EconPapers)
JEL-codes: C72 L13 O33 (search for similar items in EconPapers)
Date: 2000-11
Note: EM
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Related works:
Journal Article: Perpetual Leapfrogging in Bertrand Duopoly (2001)
Working Paper: Perpetual leapfrogging in Bertrand duopoly (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0012

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