Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/159290 
Year of Publication: 
2002
Series/Report no.: 
Quaderni - Working Paper DSE No. 449
Publisher: 
Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE), Bologna
Abstract: 
We present a differential duopoly game with capacity accumulation, wherethe closed-loop memoryless Nash equilibrium collapses into the open-loop Nash equilibrium. Sy mmetric Bertrand and Cournot equilibria are observationally equivalent. This result encompasses the conclusions of the well known model Kreps and Scheinkman (1983) concerning the equivalence between the Bertrand and Cournot settings in a static two-stage game. However, in the dynamic framevork, the equilibrium outcome is different, when one firm plays à la Bertrand and the other à la Cournot. This has relevant bearings upon firms` endogenous choice of the market variable, as well as the social desirability of prices vs quantities. For some admissible parameter ranges, the conflict between private and social incentives concerning the choice between prices and quantity disappears.
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Working Paper

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