Endogeneous strategy spaces: Simultaneous move vs. sequential move games

Brandt NM, Heitmann D (2019) Universität Bielefeld Working Papers in Economics and Management; 12-2019.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

Diskussionspapier | Veröffentlicht | Englisch
 
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Abstract / Bemerkung
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).
Stichworte
Stackelberg equilibrium; Cournot; Bertrand; strategy space
Erscheinungsjahr
2019
Band
12-2019
Seite(n)
24
ISSN
2196-2723
Page URI
https://pub.uni-bielefeld.de/record/2939601

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Brandt NM, Heitmann D. Endogeneous strategy spaces: Simultaneous move vs. sequential move games. Universität Bielefeld Working Papers in Economics and Management. Vol 12-2019. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2019.
Brandt, N. M., & Heitmann, D. (2019). Endogeneous strategy spaces: Simultaneous move vs. sequential move games (Universität Bielefeld Working Papers in Economics and Management, 12-2019). Bielefeld: Bielefeld University, Department of Business Administration and Economics. doi:10.4119/unibi/2939601
Brandt, N. M., and Heitmann, D. (2019). Endogeneous strategy spaces: Simultaneous move vs. sequential move games. Universität Bielefeld Working Papers in Economics and Management, 12-2019, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Brandt, N.M., & Heitmann, D., 2019. Endogeneous strategy spaces: Simultaneous move vs. sequential move games, Universität Bielefeld Working Papers in Economics and Management, no.12-2019, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
N.M. Brandt and D. Heitmann, Endogeneous strategy spaces: Simultaneous move vs. sequential move games, Universität Bielefeld Working Papers in Economics and Management, vol. 12-2019, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2019.
Brandt, N.M., Heitmann, D.: Endogeneous strategy spaces: Simultaneous move vs. sequential move games. Universität Bielefeld Working Papers in Economics and Management, 12-2019. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2019).
Brandt, Nikolai Malkolm, and Heitmann, Dennis. Endogeneous strategy spaces: Simultaneous move vs. sequential move games. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2019. Universität Bielefeld Working Papers in Economics and Management. 12-2019.
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2019-12-17T13:09:18Z
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