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Comparing Cournot and Bertrand equilibria in a differentiated duopoly with product R&D

Symeonidis, G (2003) 'Comparing Cournot and Bertrand equilibria in a differentiated duopoly with product R&D.' International Journal of Industrial Organization, 21 (1). 39 - 55. ISSN 0167-7187

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Abstract

This paper compares Bertrand and Cournot equilibria in a differentiated duopoly with substitute goods and product R & D. I find that R & D expenditure, prices and firms' net profits are always higher under quantity competition than under price competition. Furthermore, output, consumer surplus and total welfare are higher in the Bertrand equilibrium than in the Cournot equilibrium if either R & D spillovers are weak or products are sufficiently differentiated. If R & D spillovers are strong and products are not too differentiated, then output, consumer surplus and total welfare are lower in the Bertrand case than in the Cournot case. Thus a key finding of the paper is that there are circumstances where quantity competition can be more beneficial than price competition both for consumers and for firms. © 2003 Elsevier Science B.V.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Aug 2012 10:28
Last Modified: 06 Sep 2017 07:15
URI: http://repository.essex.ac.uk/id/eprint/3688

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