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Price and Quantity Competition in a Differentiated Duopoly with Upstream Suppliers

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  • Mónica Correa-López
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    Abstract

    "This paper analyzes the noncooperative game on the choice of strategic variable to set in duopoly in the presence of an upstream market for the input. For the case of labor input, the analysis shows that if the wage is the result of decentralized firm-union bargain, a duopoly producing substitutes may choose to compete either in the quantity space or in the price space, depending upon the distribution of bargaining power in the wage negotiation and the union's relative preference over the wage. For the case of input suppliers as profit-maximizing firms, the paper shows that a vertically differentiated duopoly may prefer to compete either in the quantity space or in a mixed strategy setting where the high-quality firm plays price and the low-quality firm plays quantity, depending upon the extent of substitutability, the degree of vertical product differentiation and the distribution of bargaining power in the input price negotiation." Copyright 2007, The Author(s) Journal Compilation (c) 2007 Blackwell Publishing.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

    Volume (Year): 16 (2007)
    Issue (Month): 2 (06)
    Pages: 469-505

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    Handle: RePEc:bla:jemstr:v:16:y:2007:i:2:p:469-505

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    Cited by:
    1. Luciano Fanti & Nicola Meccheri, 2012. "Managerial Delegation under Alternative Unionization Structures," Working Paper Series 07_12, The Rimini Centre for Economic Analysis.
    2. Luciano Fanti & Nicola Meccheri, 2012. "Differentiated duopoly and horizontal merger profitability under monopoly central union and convex costs," Discussion Papers 2012/134, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Valletti, T & Iozzi, A, . "Vertical bargaining and countervailing power," Working Papers 5958, Imperial College, London, Imperial College Business School.
    4. Kangsik, Choi, 2011. "Cournot and Bertrand competition with asymmetric costs in a mixed duopoly," MPRA Paper 34100, University Library of Munich, Germany.
    5. Nicola Meccheri & Luciano Fanti, 2012. "Managerial Delegation Schemes in a Duopoly with Endogenous Production Costs: A Comparison of Sales and Relative Profit Delegation under Centralised Unionisation," Working Paper Series 44_12, The Rimini Centre for Economic Analysis.
    6. George Symeonidis, 2009. "Downstream merger and welfare in a bilateral oligopoly," Economics Discussion Papers 671, University of Essex, Department of Economics.
    7. Choi, Kangsik, 2008. "Comparing Cournot and Bertrand Competition in a Unionized Mixed Duopoly," MPRA Paper 15468, University Library of Munich, Germany, revised 27 May 2009.
    8. Luciano Fanti & Nicola Meccheri, 2013. "Non-rigid wages and merger profitability reversal under convex costs and centralised unionisation," Discussion Papers 2013/167, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Luciano Fanti & Nicola Meccheri, 2014. "Capacity choice and welfare under alternative unionisation structures," Discussion Papers 2014/176, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    10. Kangsik, Choi, 2008. "Cournot-Bertrand competition in a unionized mixed duopoly," MPRA Paper 12787, University Library of Munich, Germany, revised 26 Dec 2008.
    11. Yu-ter Wang, 2008. "Product Differentiation: An Alternative To Cvds," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 513-517, 09.
    12. Kangsik, Choi, 2012. "Cournot and Bertrand competition with asymmetric costs in a mixed duopoly revisited," MPRA Paper 37704, University Library of Munich, Germany, revised 28 Mar 2012.
    13. Fanti, Luciano & Meccheri, Nicola, 2014. "Profits and competition under alternative technologies in a unionized duopoly with product differentiation," Research in Economics, Elsevier, vol. 68(2), pages 157-168.

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