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Technology Adoption in a Differentiated Duopoly - Cournot versus Bertrand

Rupayan Pal

Microeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: This paper compares equilibrium technology adoption in a differentiated duopoly under two alternative modes of product market competition, Cournot and Bertrand. It shows that the cost of technology has differential impact on technology adoption, that is, on cost-efficiency of the industry, under two alternative modes of product market competition. The possibility of ex post cost asymmetry between firms is higher under Bertrand competition than under Cournot competition. If the cost of technology is high, Bertrand competition leads to higher cost-efficiency than Cournot competition provided that the cost reducing effect of the technology is high. On the other hand, if the technology reduces the marginal cost of production by a very low amount, Cournot competition may lead to higher cost-efficiency than Bertrand competition.

Keywords: Differentiated duopoly; limit-pricing; price effect; selection effect; technology adoption (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 O31 (search for similar items in EconPapers)
Date: 2009-01
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Related works:
Journal Article: Technology adoption in a differentiated duopoly: Cournot versus Bertrand (2010) Downloads
Working Paper: Technology adoption in a differentiated duopoly: Cournot versus bertrand (2009) Downloads
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