Technology adoption in a differentiated duopoly: Cournot versus Bertrand
AbstractThis paper shows that the cost as well as the effectiveness of technology has a differential impact on technology adoption under two alternative modes of competition. If the cost of the technology is high, Bertrand competition provides a stronger incentive to adopt technology than Cournot competition unless the effectiveness of the technology is very low. On the contrary, if the cost of the technology is low, Cournot competition fares better than Bertrand competition in terms of technology adoption by firms. This demonstrates that the commonly subscribed assumption of 'positive primary outputs' restricts (inflates) the scope of higher degree of technology adoption under Bertrand (Cournot) competition. Moreover, in contrast to standard welfare ranking, it shows that Cournot competition leads to higher social welfare than Bertrand competition under certain situations.
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Bibliographic InfoArticle provided by Elsevier in its journal Research in Economics.
Volume (Year): 64 (2010)
Issue (Month): 2 (June)
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Web page: http://www.elsevier.com/locate/inca/622941
Differentiated duopoly Limit-pricing Price effect Selection effect Technology adoption;
Other versions of this item:
- Rupayan Pal, 2009. "Technology Adoption in a Differentiated Duopoly - Cournot versus Bertrand," Microeconomics Working Papers 22388, East Asian Bureau of Economic Research.
- Rupayan Pal, 2009. "Technology adoption in a differentiated duopoly: Cournot versus bertrand," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2009-001, Indira Gandhi Institute of Development Research, Mumbai, India.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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