Stability Analysis in a Bertrand Duopoly with Different Product Quality and Heterogeneous Expectations
AbstractWe study the local stability properties of a nonlinear Bertrand duopoly with vertical differentiation and heterogeneous players under the hypotheses of both covered and uncovered markets. In the former case, the unique pure strategy Nash equilibrium can undergo a flip bifurcation when the extent of consumer’s heterogeneity increases. In the latter, the quality differential determines the stability of prices over time. Numerical evidence is provided to show the occurrence of endogenous fluctuations. Copyright Springer Science+Business Media New York 2013
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Bibliographic InfoArticle provided by Springer in its journal Journal of Industry, Competition and Trade.
Volume (Year): 13 (2013)
Issue (Month): 4 (December)
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Web page: http://springerlink.metapress.com/link.asp?id=105724
bifurcation; duopoly; heterogeneous expectations; price competition; vertical differentiation; C62; D43; L13; L15;
Other versions of this item:
- Fanti, Luciano & Gori, Luca, 2011. "Stability analysis in a Bertrand duopoly with different product quality and heterogeneous expectations," MPRA Paper 33480, University Library of Munich, Germany.
- Luciano Fanti & Luca Gori, 2011. "Stability analysis in a Bertrand duopoly with different product quality and heterogeneous expectations," Discussion Papers 2011/122, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
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