Title: Price and quantity competition in network goods duopoly: a reversal result
Abstract: This paper revisits the classic profit-ranking of Cournot and Bertrand equilibria and the issue of endogenous choice of strategic variables for product market competition, but for a network goods duopoly. It demonstrates that in the case of strong network externalities and imperfect-substitute goods (a) the classic profit-ranking is reversed - each firm earns higher profit under Bertrand competition than that under Cournot competition and (b) firms face a prisoners' dilemma type of situation while choosing between a price contract and a quantity contract and end up with Pareto inferior outcomes, unlike as in the case of standard non-network goods duopoly.
Publication Year: 2014
Publication Date: 2014-05-11
Language: en
Type: article
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Cited By Count: 32
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