On the efficiency of Bertrand and Cournot equilibrium in the presence of asymmetric network compatibility effects

Tsuyoshi Toshimitsu

No 129, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Based on a differentiated duopoly model, we consider the efficiency of Bertrand and Cournot equilibrium in the presence of network effects and product compatibility. In particular, we demonstrate that if an asymmetric product compatibility with a strong network effect between the firms arises, give certain conditions, Cournot equilibrium is more efficient than Bertrand equilibrium in terms of greater consumer, producer, and social surplus.

Keywords: Bertrand equilibrium; Cournot equilibrium; product compatibility; network effect; fulfilled expectation; horizontally differentiated duopoly (search for similar items in EconPapers)
JEL-codes: L13 L32 L33 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2015-06, Revised 2015-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-net
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:129

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