Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 1999:9: A Note on Price and Quantity Competition in Differentiated Oligopolies

Jonas Häckner ()
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Jonas Häckner: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: In this not we show that the results developed in Singh and Vives (1984) are sensitive to the duopoly assumtion (Rand Journal of Economics 15, 546-554). If there are more than two firms, prices may be higher under price competition than unde quantity competition. This will be the case if quality differences are large and goods are complements. If goods are substitutes, high-quality fims may earn higher profits unde price competion than under quantity competition. Hence, it is not evident which kind of competition is more efficient.

Keywords: Product Differentiation; Oligopoly; Cournot; Bertrand

JEL-codes: D43; L13

8 pages, August 17, 1999

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