TY  - GEN
AB  - In a horizontal differentiated duopoly we compare Nash and Stackelberg
equilibria in which the firms endogeneously choose to behave as a price or
quantity setter. Using the utility function introduced by Dixit (1979) we
generalize the model of Boyer and Moreaux (1987) and show that it is always
more profitable to strategically set the price (quantity) if the goods
are complements (substitutes). For every degree of product differentiation,
consumer surplus and total welfare are maximal in the standard Bertrand
equilibrium, followed by the price Stackelberg, the quantity Stackelberg and
the Cournot equilibrium. In contrast to Boyer and Moreaux we show that
there is no unique ranking of prices, quantities and profits of the leader and
follower depending on the degree of product differentiation and the type of
competition. Furthermore, we show that the price (quantity) Stackelberg
equilibrium is bounded by the Bertrand and the mixed Nash equilibrium in
which firm 1 sets the price (quantity) and firm 2 the quantity (price).
DA  - 2019
DO  - 10.4119/unibi/2939601
KW  - Stackelberg equilibrium
KW  - Cournot
KW  - Bertrand
KW  - strategy space
LA  - eng
PY  - 2019
SN  - 2196-2723
SP  - 24-
TI  - Endogeneous strategy spaces: Simultaneous move vs. sequential move games
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29396019
Y2  - 2024-11-22T02:06:51
ER  -