Duopoly Experimentation: Cournot And Bertrand Competition
AbstractThis 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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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1991-07.
Length: 55 pages
Date of creation: Jan 1991
Date of revision:
Publication status: Published by Ivie
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