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Technology adoption in a differentiated duopoly: Cournot versus Bertrand

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  • Pal, Rupayan

Abstract

This 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 Info

Article provided by Elsevier in its journal Research in Economics.

Volume (Year): 64 (2010)
Issue (Month): 2 (June)
Pages: 128-136

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Handle: RePEc:eee:reecon:v:64:y:2010:i:2:p:128-136

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Web page: http://www.elsevier.com/locate/inca/622941

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Keywords: Differentiated duopoly Limit-pricing Price effect Selection effect Technology adoption;

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  1. repec:ebl:ecbull:v:12:y:2005:i:6:p:1-6 is not listed on IDEAS
  2. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
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  8. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
  9. Radhika Lahiri & Shyama Ratnasiri, 2007. "Concerning Inequality, Technology Adoption, and Structural Change," International Advances in Economic Research, Springer, vol. 13(4), pages 527-528, November.
  10. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  11. Jensen, Richard, 1992. "Innovation Adoption and Welfare under Uncertainty," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 173-80, June.
  12. Amir, Rabah & Jin, Jim Y., 2001. "Cournot and Bertrand equilibria compared: substitutability, complementarity and concavity," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 303-317, March.
  13. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
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Cited by:
  1. Trishita Bhattacharjee & Rupayan Pal, 2013. "Price vs. Quantity in duopoly with strategic delegation: Role of network externalities," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-010, Indira Gandhi Institute of Development Research, Mumbai, India.
  2. Rupayan Pal, 2012. "Delegation And Emission Tax In A Differentiated Oligopoly," Manchester School, University of Manchester, vol. 80(6), pages 650-670, December.

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