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A Competitive Duopoly where Information Spillovers can be Mutually Advantageous*

Published online by Cambridge University Press:  09 January 2015

Thierry Lafay
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Summary

This paper studies the production strategies of firms in a duopoly market of homogenous products characterized by quantity competition. Demand is partially unknown and firms are free to produce once, whenever they want before the existence of demand. We show that the nature of the equilibrium in such a game depends on the importance of the information spillovers between a leader and a follower. A Pareto-optimal sequential entry may happen. Therefore, the existence of information spillovers can be sufficient to bypass the leader's rent dissipation result in a duopoly quantity competition framework.

Cet article étudie les stratégies de production d'un duopole sur un marché de biens homogènes caractérisé par une concurrence en quantité. La demande n'est que partiellement connue par les firmes et ces dernières peuvent produire quand elles le souhaitent avant la réalisation de la demande du marché. Nous montrons que la nature de l'équilibre dans ce type de jeu dépend de l'importance des spillovers informationnels entre le leader et le suiveur. Une entrée séquentielle Pareto dominante est parfois possible. Ainsi l'existence de spillovers informationnels peut suffire à éviter la traditionnelle dissipation de la rente du leader.

Keywords

CournotStackelbergpreemptioninformation spilloversCournotStackelbergpreemptionspillovers informationnelsD43D83L13D43D83L13
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 77 , Issue 1 , March 2011 , pp. 79 - 100
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2011 

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Footnotes

**

PRISM-Sorbonne, Université Paris 1 Panthéon-Sorbonne, 17 rue de la Sorbonne, 75231 Paris. Email: tlafay@univ-paris1.fr

*

The author thanks two anonymous referees and Jean Pierre Ponssard for the time he spent in the elaboration of the model, for his comments and useful advices

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