Competitiveness and Conjectural Variation in Duopoly Markets
Duopoly competition can take different forms: Bertrand, Cournot, Bertrand-Stackelberg, Cournot-Stackelberg and joint profit maximization. In comparing these market structures this paper make three contributions. First, we find a clear price (output) ranking among these five markets when goods are substitutes (complements). Second, these rankings can be explained by different levels of conjectural variation associated with each market structure. Third, in a more general non-linear duopoly model we find that CV in prices tends to hurt consumers, while CV in quantities is often good for social welfare. In this last case the policy recommendation for regulators seems to be to encourage the establishment of firms’ reputation in quantity responses, but to discourage it in price responses.
|Date of creation:||Dec 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 01334 462420
Fax: 01334 462438
Web page: http://crieff.wordpress.com/
More information through EDIRC
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.:
- John McMillan, 1984. "Collusion, Competition, and Conjectures," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 788-805, November.
- Boyer, M. & Moreaux, M., 1982.
"Consistent Versus Non-Consistent Conjectures in Duopoly Theory: Some Examples,"
Cahiers de recherche
8206, Universite de Montreal, Departement de sciences economiques.
- Boyer, Marcel & Moreaux, Michel, 1983. "Consistent versus Non-Consistent Conjectures in Doupoly Theory: Some Examples," Journal of Industrial Economics, Wiley Blackwell, vol. 32(1), pages 97-110, September.
- BOYER, Marcel & MOREAUX, Michel, . "Consistent versus non-consistent conjectures in duopoly theory: some examples," CORE Discussion Papers RP -544, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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.
- Gollop, Frank M. & Roberts, Mark J., 1979. "Firm interdependence in oligopolistic markets," Journal of Econometrics, Elsevier, vol. 10(3), pages 313-331, August.
- Morton I. Kamien & Nancy L. Schwartz, 1983. "Conjectural Variations," Canadian Journal of Economics, Canadian Economics Association, vol. 16(2), pages 191-211, May.
- Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-66, September.
- Okuguchi, Koji, 1987. "Equilibrium prices in the Bertrand and Cournot oligopolies," Journal of Economic Theory, Elsevier, vol. 42(1), pages 128-139, June.
- Robson, Arthur J, 1983. "Existence of Consistent Conjectures: Comment," American Economic Review, American Economic Association, vol. 73(3), pages 454-56, June.
- Michael Pfaffermayr, 1999.
"Conjectural-variation models and supergames with price competition in a differentiated product oligopoly,"
Journal of Economics,
Springer, vol. 70(3), pages 309-326, October.
- Michael Pfaffermayr, . "Conjectural Variation Models and Supergames with Price Competition in a Differentiated Product Oligopoly," WIFO Working Papers 123, WIFO.
- Ulph, David, 1983. "Rational conjectures in the theory of oligopoly," International Journal of Industrial Organization, Elsevier, vol. 1(2), pages 131-154, June.
- Martin K. Perry, 1982. "Oligopoly and Consistent Conjectural Variations," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 197-205, Spring.
- Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-45, December.
- Leonard Cheng, 1985. "Comparing Bertrand and Cournot Equilibria: A Geometric Approach," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 146-152, Spring.
- Charles D. Kolstad & Frank A. Wolak, 1986. "Conjectural Variation and the Indeterminacy of Duopolistic Equilibria," Canadian Journal of Economics, Canadian Economics Association, vol. 19(4), pages 656-77, November.
- Anderson, Simon P. & Engers, Maxim, 1992. "Stackelberg versus Cournot oligopoly equilibrium," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 127-135, March.
- Appelbaum, Elie, 1979. "Testing price taking behavior," Journal of Econometrics, Elsevier, vol. 9(3), pages 283-294, February.
- Boyer, M., 1981. "Strategic Equilibrium with Reaction Threats," Cahiers de recherche 8137, Universite de Montreal, Departement de sciences economiques.
- 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.
- Fama, Eugene F & Laffer, Arthur B, 1972. "The Number of Firms and Competition," American Economic Review, American Economic Association, vol. 62(4), pages 670-74, September.
- Dastidar, Krishnendu Ghosh, 2004. "On Stackelberg games in a homogeneous product market," European Economic Review, Elsevier, vol. 48(3), pages 549-562, June.
- Hathaway, Neville J. & Rickard, John A., 1979. "Equilibria of price-setting and quantity-setting duopolies," Economics Letters, Elsevier, vol. 3(2), pages 133-137.
- Vives, Xavier, 1985. "On the efficiency of Bertrand and Cournot equilibria with product differentation," Journal of Economic Theory, Elsevier, vol. 36(1), pages 166-175, June.
When requesting a correction, please mention this item's handle: RePEc:san:crieff:0613. 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: (Bram Boskamp)
If references are entirely missing, you can add them using this form.