Technology adoption in a differentiated duopoly: Cournot versus Bertrand
This paper shows that the cost as well as the effectiveness of technology has a differential impact on technology adoption under two alternative modes of competition. If the cost of the technology is high, Bertrand competition provides a stronger incentive to adopt technology than Cournot competition unless the effectiveness of the technology is very low. On the contrary, if the cost of the technology is low, Cournot competition fares better than Bertrand competition in terms of technology adoption by firms. This demonstrates that the commonly subscribed assumption of 'positive primary outputs' restricts (inflates) the scope of higher degree of technology adoption under Bertrand (Cournot) competition. Moreover, in contrast to standard welfare ranking, it shows that Cournot competition leads to higher social welfare than Bertrand competition under certain situations.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aubhik Khan & B. Ravikumar, 1998.
"Costly Technology Adoption and Capital Accumulation,"
Development and Comp Systems
- Aubhik Khan & B. Ravikumar, 2002. "Costly Technology Adoption and Capital Accumulation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 489-502, April.
- Khan, A. & Ravikumar, B., 1997. "Costly Technology Adoption and Capital Accumulation," Working Papers 97-12, University of Iowa, Department of Economics.
- Aubhik Khan & B. Ravikumar, 2000. "Costly technology adoption and capital accumulation," Working Papers 00-7, Federal Reserve Bank of Philadelphia.
- Radhika Lahiri & Shyama Ratnasiri, 2007.
"Concerning Inequality, Technology Adoption, and Structural Change,"
International Advances in Economic Research,
International Atlantic Economic Society, vol. 13(4), pages 527-528, November.
- Radhika Lahiri & Shyama Ratnasiri, 2006. "Concerning Inequality, Technology Adoption, and Structural Change," School of Economics and Finance Discussion Papers and Working Papers Series 207, School of Economics and Finance, Queensland University of Technology.
- Piercarlo Zanchettin, 2006. "Differentiated Duopoly with Asymmetric Costs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(4), pages 999-1015, December.
- Bester, H. & Petrakis, E., 1991.
"The Incentives for Cost Reduction in a Differentiated Industry,"
1991-36, Tilburg University, Center for Economic Research.
- Bester, Helmut & Petrakis, Emmanuel, 1993. "The incentives for cost reduction in a differentiated industry," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 519-534.
- Bester, H. & Petrakis, E., 1991. "The Incentives for Cost Reduction in a Differentiated Industry," Papers 9136, Tilburg - Center for Economic Research.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
- Jensen, Richard, 1992. "Innovation Adoption and Welfare under Uncertainty," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 173-80, June.
- Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, June.
- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
- Bonanno, Giacomo & Haworth, Barry, 1998. "Intensity of competition and the choice between product and process innovation," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 495-510, July.
- Amir, Rabah & Jin, Jim Y., 2001. "Cournot and Bertrand equilibria compared: substitutability, complementarity and concavity," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 303-317, March.
- repec:dgr:kubcen:199136 is not listed on IDEAS
- Leung, Charles Ka Yui & Tse, Chung Yi, 2001. "Technology Choice and Saving in the Presence of a Fixed Adoption Cost," Review of Development Economics, Wiley Blackwell, vol. 5(1), pages 40-48, February.
- repec:ebl:ecbull:v:12:y:2005:i:6:p:1-6 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:eee:reecon:v:64:y:2010:i:2:p:128-136. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.