Technology Adoption in a Differentiated Duopoly: Cournot versus Bertrand
AbstractThis paper compares equilibrium technology adoption in a differentiated duopoly under two alternative modes of product market competition, Cournot and Bertrand. It shows that the cost of technology has differential impact on technology adoption, that is, on cost-efficiency of the industry, under two alternative modes of product market competition. The possibility of ex post cost asymmetry between firms is higher under Bertrand competition than under Cournot competition. If the cost of technology is high, Bertrand competition leads to higher cost-efficiency than Cournot competition provided that the cost reducing effect of the technology is high. On the other hand, if the technology reduces the marginal cost of production by a very low amount, Cournot competition may lead to higher cost-efficiency than Bertrand competition.[IGIDR WP NO 1]
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Date of creation: May 2009
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Differentiated duopoly; limit-pricing; price effect; selection effect; technology adoption; cournot; bertrand;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-23 (All new papers)
- NEP-COM-2009-05-23 (Industrial Competition)
- NEP-MIC-2009-05-23 (Microeconomics)
- NEP-TID-2009-05-23 (Technology & Industrial Dynamics)
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