Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73351
Authors: 
Reisinger, Markus
Ressner, Ludwig
Year of Publication: 
2008
Series/Report no.: 
BGPE Discussion Paper 58
Abstract: 
This paper analyzes an infinite horizon dynamic duopoly with stochastic demand in which firms face costs of absorbing and processing information. Our main result is that the structure of dates at which firms choose to absorb information differ starkly between price and quantity competition. Firms synchronize their actions under price competition whereas they plan sequentially and in an alternating manner under quantity competition. The reason is that under quantity competition the planning firm reduces the uncertainty in the residual demand curve of the inattentive firm which renders planning less attractive for that firm. The opposite holds true under price competition.
Subjects: 
Inattentiveness
Price Competition
Quantity Competition
Synchronization
JEL: 
C73
D43
D83
Document Type: 
Working Paper

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