TITLE:
Bertrand-Cournot Comparison in a Mixed Duopoly with Advertisement
AUTHORS:
Chul-Hi Park, Dmitriy Li, Sang-Ho Lee
KEYWORDS:
Advertisement, Differentiated Mixed Duopoly, Bertrand-Cournot Comparison
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.2,
April
6,
2016
ABSTRACT: We examine the Bertrand-Cournot comparison with advertisement in a differentiated
mixed duopoly market, and compare with the social optimum. We show that not
only both firms’ quantities but also both firms’ advertisements are higher
(lower) in Cournot (Bertrand) than the social optimum. Thus, both firms engage
in excessive (insufficient) advertisement in Cournot (Bertrand). We also show
that despite lower both firms’ prices in Cournot, both firms’ profits and
social welfare are strictly higher in Bertrand and thus, both firms prefer
Bertrand to Counrnot.