Second-mover advantage and price leadership in Bertrand duopoly

Rabah Amir () and Anna Stepanova
Authors registered in the RePEc Author Service: Anna Cartwright

No 2004037, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We consider the issue of first versus second-mover advantage in differentiated-product Bertrand duopoly with general demand and asymmetric linear costs. We generalize existing results for all possible combinations where prices are either strategic substitutes and/or complements, dispensing with common extraneous assumptions. We show that a firmwith a sufficiently large cost lead over its rival has a first mover advantage. For the linear version of the model, we invoke a naturalendogenous timing scheme coupled with equilibrium selection according to risk-dominance. This yields sequential play with the low-cost firm as leader as the unique equilibrium outcome.

Keywords: price competition; endogenous timing; first/second-mover advantage; risk dominance (search for similar items in EconPapers)
JEL-codes: C72 D43 L13 (search for similar items in EconPapers)
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Second-mover advantage and price leadership in Bertrand duopoly (2006)
Working Paper: Second-Mover Advantage and Price Leadership in Bertrand Duopoly (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2004037

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