Duopoly

Under oligopoly firms are often observed to specialise their production, with some firms producing highly reliable output and offering good warranty deals, while others produce less reliable output and offer less attractive warranties, but charge a lower price. This paper develops an approach to product/service reliability which provides an alternative to the conventional analysis based on the characteristics approach. The model of this paper defines reliability as the objective probability of product failure, not as a characteristic of individual goods. Reliability, thus defined, is treated as a choice variable of the firm, and consumers' preferences are partially endogenised. This approach to reliability is incorporated into a duopoly model which explains the phenomenon of specialisation described above. The model is applicable to the markets for consumer durables, some intermediate goods and some services.

Sur le marché des semi-conducteurs, deux géants se livrent une bataille féroce : Intel et AMD (Advance Micro Devices). Nous nous intéressons dans cet article à la compétition au sein du marché de microprocesseur de type x86 entre ces deux seuls joueurs en place. Nous exposons les grandes lignes de l’historique des firmes, la structure de secteur et les comportements concurrentielles entre les firmes. Un modèle simple est construit pour démontrer sur quelle mesure la différenciation verticale va impacter les caractéristiques de l’équilibre.

Adidas and Nike currently control 74% of the global football market, a prime example of duopoly. Their share is predicted to increase; consequently, it is crucially important for consumers to assess whether such a duopolistic setting is beneficial for them. In particular, London hosts the greatest number of footballers in the UK, and is a key playing field for the two firms. Thus, this essay investigates: ‘to what extent is a duopoly in the football industry in London beneficial to consumers?’

Firstly, the paper assesses how price in duopoly would change if we transitioned from duopoly, to monopolistic competition. The aim was to assess consumers’ monetary welfare. Secondly, it explores how the market structure influences quality. It uses research from world leading economists to argue that a duopolistic market leads to the highest R&D industry-wide. Thirdly, it analyses a 203-responses survey, which was conducted at football clubs in London to understand how much customers were willing to spend for a given level of R&D. The aim was to see whether a duopoly would have been consistent with their desired combination of price and quality. That way, we could judge whether deviating from duopoly would have benefited them. This analysis was complemented by an interview with a high-profile executive at Adidas.

The investigation finds that monopolistic competition would be more beneficial than duopoly in terms of price, as these would fall with more competition. However, it also reveals that duopoly is more beneficial than any other type of market structure in terms of quality, because of the higher amount of R&D. The analysis of consumer preferences ultimately proves that customers find the duopoly to be the most beneficial type of market structure in the football industry in London.

A  critique of the article “Yes, you do have an obligation to vote for the lesser of two evils. Here’s why," from the Washington Post (6/1/16). Attached is a final draft and a link to a version on the "It Is What It Isn't" Blog. See also the illustrated version on Academia.edu.

El presente trabajo aplica los modelos de Cournot y de Stackelberg a una industria de productos homogéneos con alto nivel de concentración. El objeto es usar estos modelos como criterio de decisión acerca de la alternativa de introducir una nueva marca por parte de un competidor actual. Se trata de establecer si lanzar una nueva marca sería una estrategia relevante para una empresa en la búsqueda de captar mayor mercado. Se asume que en un mercado de bienes básicos y homogéneos, la demanda no se modifica ante el ingreso de una nueva marca y que el espacio de mercado que absorbe la nueva marca, procede de la participación que resta de las marcas existentes. Se muestra como, la cantidad que produce cada competidor nuevamente converge con el equilibrio de Cournot, por lo cual, no existe beneficio adicional producto del lanzamiento de la marca nueva, si se supone racionalidad. Teóricamente las firmas con mejor posición en el mercado se verán menos inclinadas a lanzar nuevas marcas y preferirán mantener o mejorar su posicionamiento, las firmas con menos participación en el mercado serán las más inclinadas a realizar nuevos lanzamientos. Se concluye que la introducción de marcas en mercados homogéneos de bienes básicos poco diferenciados no es una estrategia interesante para incrementar la participación en el mercado cuando las marcas de quienes lanzan los productos no están bien posicionadas. Para los efectos de la ilustración de los planteamientos anteriores se utilizó como base la industria molinera de arroz blanco en Colombia.

Streszczenie: Autor artykułu opisuje najważniejsze momenty związane z kilkunastoletnią obecnością dwóch zagranicznych koncernów (Passauer Neue Presse i Orkla) na polskim rynku regionalnej prasy codziennej. Począwszy od pierwszych inicjatyw wydawniczych, poprzez fazę ostrej konkurencji między obu spółkami i kształtowanie się duopolu, a na spluralizowanym monopolu skończywszy. Autor podsumowuje dokonania Orkli i Passauera w poszczególnych regionach Polski. W artykule jest także mowa o ekspansji kapitału zagranicznego na rynki lokalne oraz o konsolidowaniu spółek wydawniczych i fuzjach tytułów należących do obu koncernów. Zakończenie aktywności Norwegów (Orkli) w Polsce, wykupienie ich gazet przez brytyjski fundusz Mecom i utworzenie dziennika ogólnopolskiego przez Passauera, zdaniem autora, wyznacza nowy etap na rynku prasowym w Polsce. Może się on zakończyć monopolizacją regionalnej prasy codziennej.

We present a dynamic extension of the classic static model of Bertrand price competition that allows competing duopolists to undertake cost-reducing investments in an attempt to "leapfrog" their rival to attain low-cost leadership-at least temporarily. We show that leapfrogging occurs in equilibrium, resolving the Bertrand investment paradox., i.e. leapfrogging explains why firms have an ex ante incentive to undertake cost-reducing investments even though they realize that simultaneous investments to acquire the state of the art production technology would result in Bertrand price competition in the product market that drives their ex post profits to zero. Our analysis provides a new interpretation of "price wars". Instead of constituting a punishment for a breakdown of tacit collusion, price wars are fully competitive outcomes that occur when one firm leapfrogs its rival to become the new low cost leader. We show that the equilibrium involves investment preemption only when the firms invest in a deterministically alternating fashion and technological progress is deterministic. We prove that when technological progress is deterministic and firms move in an alternating fashion, the game has a unique Markov perfect equilibrium. When technological progress is stochastic or if firms move simultaneously, equilibria are generally not unique. Unlike the static Bertrand model, the equilibria of the dynamic Bertrand model are generally inefficient. Instead of having too little investment in equilibrium, we show that duopoly investments generally exceed the socially optimum level. Yet, we show that when investment decisions are simultaneous there is a "monopoly" equilibrium when one firm makes all the investments, and this equilibrium is efficient. However, efficient non-monopoly equilibria also exist, demonstrating that it is possible for firms to achieve efficient dynamic coordination in their investments while their customers also benefit from technological progress in the form of lower prices.

Una política que fortalece la competencia a largo plazo en el sector postal es la actuación sobre los costes de cambio y de retención. En dos escenarios de duopolio, uno con costes de cambio y otro con costes de cambio y costes de retención, el objetivo del presente trabajo es descubrir en qué medida la variación de los costes de cambio de proveedor y de los costes de retención afectan al excedente del consumidor y al beneficio de las dos firmas y, en consecuencia, al bienestar social. Se desarrolla una ampliación propia del modelo seminal de Klemperer, que incorpora los costes de retención. La metodología consiste en la determinación y comparación de las situaciones del equilibrio Cournot-Nash. Los resultados obtenidos muestran la importancia de las políticas orientadas a la reducción de los costes de cambio de proveedor como una de las políticas que fortalecen la competencia a largo plazo en un servicio de interés general, como es el servicio postal

A simple Ising spin model which can describe the mechanism of advertising in a duopoly market is proposed. In contrast to other agent-based models, the influence does not flow inward from the surrounding neighbors to the center site, but spreads outward from the center to the neighbors. The model thus describes the spread of opinions among customers. It is shown via standard Monte Carlo simulations that very simple rules and inclusion of an external field -an advertising campaign -lead to phase transitions.

This study investigates the effects of advertising on price and quality of products in monopoly and duopoly markets. We examine, by a diagrammatical approach, the state of profitability in a firm both before and after advertising being implemented. Our results show that advertising is directly related to the price and profitability in a monopoly market; however, in the context of a duopoly market, the relationship is uncertain. Our findings also suggest that quality tends to be higher when the price is higher and vice versa. This conclusion holds true for the monopoly market and for the duopoly market.

This paper explores the implication of evolutionary models (replicatordynamics) in a simple Cournot duopoly model. A firm type is a linear decisionrule in which the firm's output depends on the other firm's previous output.First we run an Axelrod Tournament between firm types. The champion firm isa near profit-maximizer. Secondly, we allow social evolution to occur usingreplicator dynamics. Here we find

This study showcases Uganda’s experience with the reform of the telecommunications sector that has taken place over the last decade. The reform of Uganda’s telecommunications sector has been billed as a more successful one in relation to experiences in other sectoral reforms, which provides motivation for the study. Incentive for the study also arises out of the need to document how the process was undertaken, particularly from the aspects that will inform the understanding of the design, management and implementation of the reform was undertaken. As a study meant to analyze the political economy of investment climate reform, it deals more with the legal, institutional and political nuances that underpinned the reform management process.

This study examines the eflects of demand shifts upon the duopoly price level. The tool is a set of rich simulation models that include uncertainty, a multi-period horizon, learning, and realistic interseller competition embodying customer inertia. The context is comparative dynamics in which the only change is in the demand curve variations. Surprisingly, it is found that a proportional increase in the demand function may either raise or lower price. The outcome depends upon the shape of the cost curve. If marginal cost is declining, an increase in demand leads to a decrease in price. If marginal cost is increasing, an increase in demand leads to a decrease in price. If marginal cost is constant, price is unaflected by a proportional change in demand. Changes in elasticity have the same eflect on price in duopoly as in monopoly. These findings suggest that a short-run decrease in consumption of an oligopolized product will not lead to a reduced real price, given reasonable assumptions about the nature of the demand and supply functions.

Power market integration is analyzed in a two countries model with nationally regulated firms and costly public funds. If generation costs between the two countries are too similar negative business-stealing outweighs efficiency gains so that following integration welfare decreases in both regions. Integration is welfare-enhancing when the cost difference between the two regions is large enough. The benefit from export profits increases total welfare in the exporting country, while the importing country benefits from lower prices. This is a case where market integration also improves the incentives to invest compared to autarky. The investment levels remain inefficient though. With generation facilities over-investment occurs sometimes, while systematic under-investment occurs for transportation facilities. Free-riding reduces the incentives to invest in these public-good components, while business-stealing tends to reduce the capacity for financing new investment.

Competition is the cornerstone of successful telecommunications development. Morocco's telecommunications reforms in 1995-1999, which among other changes introduced competition in mobile phones, led to fast growth, and improved sector performance. Plans for further competition, however, did not materialize and the sector stagnated. As a result, Morocco lost its leading regional position and the country's overall competitiveness has been compromised. Important business opportunities await new entrants, especially in the Internet market, fixed voice and data services, international calls, and domestic and international leased lines. Actions being taken by the Agence Nationale de Réglementation des Télécommunications (ANRT) to update regulations, monitor and enforce fair competition, and issue new licenses seek to effectively restart sector development. Accelerated development of network competition, focusing regulation on fair competition, further adjustments in the legal and regulatory framework, and building closer ties with regional and global regulatory regimes through trade and economic agreements would contribute to sustainable development of a competitive telecommunications sector in Morocco. 1

In a duopoly market, aspirations express how much sellers want to earn given their expectations about the other's behavior. We define individually and mutually satisficing sales behavior for given individual beliefs and aspirations. In a first experimental phase, whenever satisficing is not possible, beliefs, aspirations, or sales have to be adapted. In a second phase, testing the absorption of satisficing, participants are free to select nonsatisficing sales profiles. The results reveal that most people are satisficers who, either mandatorily or deliberately, tend to adjust aspiration levels if they cannot be satisfied.

Despite the availability of source code, deploying open source software in an enterprise environment requires skills. Recent surveys and case studies show that the skills of IT staff in an organization are one of the key factors in open source software adoption decisions. Another important factor organizations consider when choosing a platform is network effects. This paper studies how users' skills and network effects may influence the market where proprietary software competes with open source software. In the model, users make adoption decisions considering their own skills and the network effects of the software, and the proprietary software vendor prices its product strategically. It is found that in the presence of network effects, the proprietary software dominates the market when the open source software does not provide higher benefits to users. This implies that open source software, as a low-cost substitute to proprietary software, may not survive in a market exhibiting network effects. To gain market share, open source software has to outperform proprietary software by a large margin, which can be achieved when a significant portion of users are highly skilled and thus can customize the open source software to better satisfy their needs.

It is well-known that switching costs may facilitate monopoly pricing in a market with price competition between two suppliers of a homogenous good, provided the switching cost is above some critical level. With heterogeneous consumers monopoly pricing entails second degree price differentiotation with inefficient contracts for low demand types. We show that introducing consumer heterogeneity may increase the critical switching cost needed to sustain a pure-strategy equilibrium involving monopoly pricing.

In a general setting with uncertainty and spillovers in R&D activity, we consider the incentive to cooperate among firms at any or all of the following three stages. Firms can jointly agree on the level of R&D expenditures, they can set up joint research facilities, and/or they can engage in an information sharing agreements, by which they agree to share any findings with the other firm. We compare expenditures on R&D, profit levels, and welfare levels across the different possible cooperative and competitive setups and offer antitrust implications. Our model differs from previous analyses in three important ways. First, most studies consider only research aimed at lowering production costs, and therefore consider only situations where total profits fall as spillovers increase. We allow for the possibility of product innovation, and define the concepts of offsetting spillovers (falling total profits) and incremental spillovers (when total profits increase as spillovers increase). Se...

In this paper, author examine the issue of the optimal tariff in circumstances in which trade between the ‘North’ (a developed country) and the ‘South’ (a developing country) takes place. Firms compete in quantities (‘Cournot competition’) in an imperfectly competitive Northern market. In addition, there are leakages of technological knowledge (‘spillovers’) from the North to the South. The interaction between tariffs and spillovers, together with its consequences for the social welfare of the North, is the focus of the paper. Another closely related motivation of this paper stems from the observation that the so called punitive tariffs are being used as device to punish violators of intellectual property rights.

In a duopoly industry with environmentally differentiated products, we examine the effects of introducing a mandatory environmental quality standard on firms' environmental quality choices, profits, and the average environmental quality offered by the industry. We show that at low standard levels, both firms choose to overcomply regardless of the standard level. At intermediate levels, the mandatory standard can reduce the profit of the low-cost firm while increasing that of the high-cost firm, and that it can lower the industry's average environmental quality below what it would be without the standard.

Although Cournot's mathematical economics was generally neglected until the mid-1870s, he was taken up and carefully studied by the Scientific Club of Cambridge, Massachusetts even before his "discovery" by Walras and Jevons. The episode is reconstructed from fragmentary manuscripts of the pragmatist philosopher Charles S. Peirce, a sophisticated mathematician. Peirce provides a subtle interpretation and anticipates Bertrand's criticisms.

We study the effects of market structure on entry using data from the UK fast food (counter-service burger) industry over the years 1991-1995. Over this period, the market can be characterized as a duopoly. We find that market structure matters greatly: for both firms, rival presence increases expected market size. Variable profits per customer are increasing in the number of own outlets. The firms are differently affected by demand and cost variables. These results strongly suggest the presence of firm learning and market power.

This paper derives equilibrium government policies towards parallel imports in a North-South model where the Northern …rm produces high quality and the Southern …rm produces low quality. Given policies, each …rm decides whether or not to serve the other country's market. If Northern consumers have su¢ ciently higher preference for high quality, the Northern government forbids parallel imports and international price discrimination obtains: when the threat of indirect competition from arbitrage-induced parallel imports is absent, …rms choose to directly compete in both markets. If demand structures are relatively similar across countries, the North permits parallel imports and uniform pricing obtains.

In this paper we apply the Complete Analysis of Differentiable Games (introduced by D. Carfì in [3], [6], [8] and [9]) and already
employed by himself and others in [4], [5], [7]) and some new algorithms employing the software wxMaxima 11.04.0 in order to
reach a total knowledge of the classic Bertrand Duopoly (1883), viewed as a complex interaction between two competitive subjects,
in a particularly difficult asymmetric case. The software wxMaxima is an interface for the computer algebra system Maxima. Maxima
is a system for the manipulation of symbolic and numerical expressions, including differentiation, systems of linear equations, polynomials,
and sets, vectors, matrices. Maxima yields high precision numeric results by using exact fractions, arbitrary precision integers,
and variable precision floating point numbers. Maxima can plot functions and data in two and three dimensions. The Bertrand
Duopoly is a classic oligopolistic market in which there are two enterprises producing the same commodity and selling it in the same
market. In this classic model, in a competitive background, the two enterprises employ as possible strategies the unit prices of their
products, contrary to the Cournot duopoly, in which the enterprises decide to use the quantities of the commodity produced as strategies.
The main solutions proposed in literature for this kind of duopoly (as in the case of Cournot duopoly) are the Nash equilibrium
and the Collusive Optimum, without any subsequent critical exam about these two kinds of solutions. The absence of any critical
quantitative analysis is due to the relevant lack of knowledge regarding the set of all possible outcomes of this strategic interaction.
On the contrary, by considering the Bertrand Duopoly as a differentiable game (games with differentiable payoff functions) and
studying it by the new topological methodologies introduced by D. Carfì, we obtain an exhaustive and complete vision of the entire
payoff space of the Bertrand game (this also in asymmetric cases with the help of wxMaxima 11.04.0) and this total view allows us to
analyze critically the classic solutions and to find other ways of action to select Pareto strategies, in the asymmetric cases too. In
order to illustrate the application of this topological methodology to the considered infinite game, several compromise pricingdecisions
are considered, and we show how the complete study gives a real extremely extended comprehension of the classic model.

Consider a symmetric, differentiated duopoly. If firms' strategy choices, in the repeated game, follow a stochastic Darwinian process, then they cluster around a strategy profile that is typically not a one-shot Nash equilibrium. This profile is invariant under a broad class of transformations of the strategy space (e.g. Bertrand vs. Cournot); this implies that mixing imitative and rational decision-makers can produce purely imitative outcomes. The evolution of objectives consistently distorts behavior toward revenue maximization, and the distortion increases in 'good times' of high demand and low costs. We generalize the results beyond duopoly to symmetric, two-player games.

To study the coexistence of two different ownership forms within an industry, I develop a simple model of competition between one forprofit and one nonprofit firm. The two firms have different objectives and face different constraints due to their choice of ownership status. Assuming heterogenous consumers I derive quality-price bundles provided by the two firms and their market shares under various conditions.

This note further characterizes the tacit collusion equilibria in the investment timing game of Boyer, Lasserre and Moreaux [1]. Tacit collusion equilibria may or may not exist, and when they do may involve either finite time investments (type 1) or infinite delay (type 2). The relationship between equilibria and common demand forms is not immediately apparent. We provide the full necessary and sufficient conditions for existence. A simple condition on demand primitives is derived that determines the type of equilibria. Common demand forms are then shown to illustrate both finite-time and infinite-delay tacit collusion.

In this study, we analyze an advertising competition in a duopoly. We consider two different notions of equilibrium. We model the companies in the duopoly as major players, and the consumers as minor players. In our first game model we identify Nash Equilibria (NE) between all the players. Next we frame the model to lead to the search for Multi-Leader-Follower Nash Equilibria (MLF-NE). This approach is reminiscent of Stackelberg games in the sense that the major players design their advertisement policies assuming that the minor players are rational and settle in a Nash Equilibrium among themselves. This rationality assumption reduces the competition between the major players to a 2-player game. After solving these two models for the notions of equilibrium, we analyze the similarities and differences of the two different sets of equilibria.

The aim of this paper is to study the option to invest in a duopoly market, allowing for more competitors to enter the market. In fact, we relax the common assumption which states that (only) two firms compete for the two places in the market. In the existing models, the problem consists of, basically, defining which one will be the leader, which will be the follower, and when. We can say that, in these settings, the investment opportunities are semi-proprietary, since the follower’s position is, at least, guaranteed for both firms. As we said, our approach relaxes this assumption, allowing for more than two competitors for the positions on the duopoly. This additional competition has, as we will see, a major impact on the decision to invest. We also allow for both ex-post symmetry and ex-post asymmetry, and for asymmetrical investment costs for the leader and for the follower.

We study the effects of market structure on entry using data from the U.K. fast food (counter-service burger) industry over the years 1991--1995, for which the market can be characterized as a duopoly. We use both reduced-form estimations and a structural model, controlling for market-specific time-invariant unobservables. For both firms, we find that market structure matters greatly. Specifically, rival presence increases the probability of entry by increasing expected market size, whereas variable profits per customer are increasing in the number of own outlets. Our results suggest the presence of product differentiation, firm learning, and market power.

Competition is the cornerstone of successful telecommunications development. Morocco's telecommunications reforms in 1995-1999, which among other changes introduced competition in mobile phones, led to fast growth, and improved sector performance. Plans for further competition, however, did not materialize and the sector stagnated. As a result, Morocco lost its leading regional position and the country's overall competitiveness has been compromised. This paper provides a backdrop against which the Government can examine where Morocco stands today and the initiatives of the Agence Nationale de Reglementation des Telecommunications (ANRT's) to move forward. The paper focuses on changes in regulatory policy that would support the country's emerging e-agenda and would particularly help Moroccan businesses. Section II of this paper summarizes where Morocco stands at present, relative to its own past achievements in telecommunications and recent progress of other countries...

In this paper we apply the Complete Analysis of Differentiable Games (introduced by D. Carfi in [3], [6], [8] and [9]) and already employed by himself and others in [4], [5], [7]) and some new algorithms employing the software wxMaxima 11.04.0 in order to reach a total knowledge of the classic Bertrand Duopoly (1883), viewed as a complex interaction between two competitive subjects, in a particularly difficult asymmetric case. The software wxMaxima is an interface for the computer algebra system Maxima. Maxima is a system for the manipulation of symbolic and numerical expressions, including differentiation, systems of linear equations, polynomials, and sets, vectors, matrices. Maxima yields high precision numeric results by using exact fractions, arbitrary precision integers, and variable precision floating point numbers. Maxima can plot functions and data in two and three dimensions. The Bertrand Duopoly is a classic oligopolistic market in which there are two enterprises producing...

This article considers a Cournot duopoly under an isoelastic demand function and cost functions with built-in capacity limits. The special feature is that each …rm is assumed to operate multiple plants, which can be run alone or in combination. Each …rm has two plants with di¤erent capacity limits, so each has three cost options, the third being to run both plants, dividing the load according to the principle of equal marginal costs. As a consequence, the marginal costs functions come in three disjoint pieces, so the reaction functions, derived on basis of global pro…t maximization, may also consist of disjoint pieces. This is re ‡ected in a particular bifurcation structure, due to border collision bifurcations, and to particular basin boundaries, related to the discontinuities. It is shown that stable cycles may coexist, and the non-existence of unstable cycles constitutes a new property. We also compare the coexistent short periodic solutions in terms of the resulting real pro…ts.

This article considers a Cournot duopoly under an isoelastic demand function and cost functions with built-in capacity limits. The special feature is that each firm is assumed to operate multiple plants, which can be run alone or in combination. Each firm has two plants with different capacity limits, so it has three cost options, the third being to run both plants, dividing the load according to the principle of equal marginal costs. As a consequence, the marginal cost functions come in three disjoint pieces, so the reaction functions, derived on basis of global profit maximization, as well can consist of disjoint pieces. We first analyze the case in which the firms are taken as identical, and then the generic case. It is shown that stable Cournot equilibria may coexist with several other stable cycles. Then we compare the coexistent periodic attractors in terms of the resulting profits. The main property is the non-existence of unstable cycles. This is reflected in a particular bifurcation structure, due to border collision bifurcations, and to particular basin frontiers, related to the discontinuities.