Comparing Cournot and Bertrand Equilibria in the Presence of Spatial Barriers and R&D

Kuang Cheng Andy Wang; Yi Jie Wang; Wen Jung Liang

doi:10.1007/s11151-020-09775-x

Comparing Cournot and Bertrand Equilibria in the Presence of Spatial Barriers and R&D

Kuang Cheng Andy Wang, Yi Jie Wang, Wen Jung Liang^*

^*Corresponding author for this work

Center for General Education

Research output: Contribution to journal › Journal Article › peer-review

1 Scopus citations

Abstract

We compare the equilibria under Bertrand and Cournot competition in the spatial barbell model where spatial barriers and process R&D are involved. We show that when the market becomes more competitive by switching from Cournot to Bertrand competition, R&D investment may increase (decrease) depending upon a low (high) transport rate. Next, we find that under Cournot competition total output, consumer surplus, and welfare are higher, but profit is lower than is true for Bertrand competition, when the transport rate is high, which overturns the traditional result.

Original language	English
Pages (from-to)	475-491
Number of pages	17
Journal	Review of Industrial Organization
Volume	58
Issue number	3
DOIs	https://doi.org/10.1007/s11151-020-09775-x
State	Published - 05 2021

Bibliographical note

Publisher Copyright:
© 2020, Springer Science+Business Media, LLC, part of Springer Nature.

Keywords

Bertrand competition
Cournot competition
Process R&D
Spatial barriers

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1007/s11151-020-09775-x

Cite this

@article{1e684e6e43b6482483382fb8754473c5,

title = "Comparing Cournot and Bertrand Equilibria in the Presence of Spatial Barriers and R&D",

abstract = "We compare the equilibria under Bertrand and Cournot competition in the spatial barbell model where spatial barriers and process R&D are involved. We show that when the market becomes more competitive by switching from Cournot to Bertrand competition, R&D investment may increase (decrease) depending upon a low (high) transport rate. Next, we find that under Cournot competition total output, consumer surplus, and welfare are higher, but profit is lower than is true for Bertrand competition, when the transport rate is high, which overturns the traditional result.",

keywords = "Bertrand competition, Cournot competition, Process R&D, Spatial barriers",

author = "Wang, {Kuang Cheng Andy} and Wang, {Yi Jie} and Liang, {Wen Jung}",

note = "Publisher Copyright: {\textcopyright} 2020, Springer Science+Business Media, LLC, part of Springer Nature.",

year = "2021",

month = may,

doi = "10.1007/s11151-020-09775-x",

language = "英语",

volume = "58",

pages = "475--491",

journal = "Review of Industrial Organization",

issn = "0889-938X",

publisher = "Springer Netherlands",

number = "3",

}

TY - JOUR

T1 - Comparing Cournot and Bertrand Equilibria in the Presence of Spatial Barriers and R&D

AU - Wang, Kuang Cheng Andy

AU - Wang, Yi Jie

AU - Liang, Wen Jung

PY - 2021/5

Y1 - 2021/5

N2 - We compare the equilibria under Bertrand and Cournot competition in the spatial barbell model where spatial barriers and process R&D are involved. We show that when the market becomes more competitive by switching from Cournot to Bertrand competition, R&D investment may increase (decrease) depending upon a low (high) transport rate. Next, we find that under Cournot competition total output, consumer surplus, and welfare are higher, but profit is lower than is true for Bertrand competition, when the transport rate is high, which overturns the traditional result.

AB - We compare the equilibria under Bertrand and Cournot competition in the spatial barbell model where spatial barriers and process R&D are involved. We show that when the market becomes more competitive by switching from Cournot to Bertrand competition, R&D investment may increase (decrease) depending upon a low (high) transport rate. Next, we find that under Cournot competition total output, consumer surplus, and welfare are higher, but profit is lower than is true for Bertrand competition, when the transport rate is high, which overturns the traditional result.

KW - Bertrand competition

KW - Cournot competition

KW - Process R&D

KW - Spatial barriers

UR - http://www.scopus.com/inward/record.url?scp=85087963190&partnerID=8YFLogxK

U2 - 10.1007/s11151-020-09775-x

DO - 10.1007/s11151-020-09775-x

M3 - 文章

AN - SCOPUS:85087963190

SN - 0889-938X

VL - 58

SP - 475

EP - 491

JO - Review of Industrial Organization

JF - Review of Industrial Organization

IS - 3

ER -

Comparing Cournot and Bertrand Equilibria in the Presence of Spatial Barriers and R&D

Abstract

Bibliographical note

Keywords

UN SDGs

Access to Document

Other files and links

Fingerprint

Cite this