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Second-mover advantage and price leadership in Bertrand duopoly

  • Amir, Rabah
  • Stepanova, Anna

We consider the issues of endogenous timing and first versus second-mover advantage in differentiated-product Bertrand duopoly with asymmetric linear costs. First, we provide a thorough set of results in the cases where prices are either strategic substitutes and/or complements, dispensing with some common extraneous assumptions. Second, with linear demand for substitute goods, the scope for second-mover advantage crucially depends on the unit cost difference. A natural endogenous timing scheme coupled with equilibrium selection according to risk-dominance yields a unique outcome with the low-cost firm as leader.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 55 (2006)
Issue (Month): 1 (April)
Pages: 1-20

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Handle: RePEc:eee:gamebe:v:55:y:2006:i:1:p:1-20
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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