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Duopoly Experimentation: Cournot And Bertrand Competition

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Author Info

  • Amparo Urbano

    (Universitat de València)

  • María Dolores Alepuz Domenech

    (Universitat de València)

Abstract

This paper analyzes how leaming behaviour can modify the outcome of competition in an industry facing demand uncertainty. We consider a duopoly game where firms have imperfect information about market demand and leam through observing prices (Coumot competition) or sales (Bertrand) . The main body of the paper consists in showing how duopoly experimentation is affected by the type of market competition. We find that, if the goods are substitutes, firms will experiment more under Bertrand than under Coumot. If the goods are complements, the result is reversed. Furthermore, there is less experimentation under Coumot with product substitution.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1991-07.pdf
File Function: Fisrt version / Primera version, 1991
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1991-07.

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Length: 55 pages
Date of creation: Jan 1991
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:1991-07

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References

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  1. Mirman, L.J. & Samuelson, L. & Urbano, A., 1989. "Monopoly Experimentation," Papers 8-89-7, Pennsylvania State - Department of Economics.
    • Mirman, Leonard J & Samuelson, Larry & Urbano, Amparo, 1993. "Monopoly Experimentation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 549-63, August.
  2. repec:att:wimass:9206 is not listed on IDEAS
  3. Michael H. Riordan, 1985. "Imperfect Information and Dynamic Conjectural Variations," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 41-50, Spring.
  4. Antonio Villar Notario & Carmen Herrero Blanco, 1990. "Vector mappings with diagonal images," Working Papers. Serie AD 1990-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Mirman,Leonard & Samuelson,Larry & Urbano,Amparo, . "Duopoly signal jamming," Discussion Paper Serie B 199, University of Bonn, Germany.
  6. Aghion, Philippe & Espinosa, Maria Paz & Jullien, Bruno, 1993. "Dynamic Duopoly with Learning through Market Experimentation," Economic Theory, Springer, vol. 3(3), pages 517-39, July.
  7. Vives, X., 1988. "Information And Competitive Advantage," UFAE and IAE Working Papers 100-88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  8. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
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Cited by:
  1. Dolores Alepuz, M. & Urbano, Amparo, 1999. "Duopoly experimentation: Cournot competition," Mathematical Social Sciences, Elsevier, vol. 37(2), pages 165-188, March.

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