Price and quantity competition in a differentiated duopoly with network compatibility effects

Tsuyoshi Toshimitsu

No 128, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We consider endogenous choice of the strategic variables, price and quantity, in a horizontally differentiated duopoly market, assuming network effects and product compatibility (hereafter, network compatibility effects). We demonstrate the following. If the degree of network compatibility effects of the other rival firm is smaller (larger) than the degree of product substitutability, then choosing quantity (price) is a dominant strategy for the firm. In this case, the Cournot (Bertrand) equilibrium arises. If there are asymmetric network compatibility effects between the firms, the firm with larger (smaller) network compatibility effects than the degree of product substitutability chooses quantity (price). In this case, the Cournot−Bertrand equilibrium arises.

Keywords: Bertrand equilibrium; Cournot equilibrium; Cournot−Bertrand equilibrium; product compatibility; network effect; fulfilled expectation; horizontally differentiated duopoly (search for similar items in EconPapers)
JEL-codes: C72 D01 D43 L13 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2015-06, Revised 2015-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ind, nep-mic and nep-net
References: Add references at CitEc
Citations:

Downloads: (external link)
http://192.218.163.163/RePEc/pdf/kgdp128.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: Price and Quantity Competition in a Differentiated Duopoly With Network Compatibility Effects (2016)
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:kgu:wpaper:128

Access Statistics for this paper

More papers in Discussion Paper Series from School of Economics, Kwansei Gakuin University Contact information at EDIRC.
Bibliographic data for series maintained by Toshihiro Okada ().