On the Dynamic E ± ciency of Bertrand and Cournot Equilibria
نویسنده
چکیده
This paper compares Bertrand and Cournot equilibria in a di®erentiated duopoly with R&D (research and development) competition. Cournot competition is shown to induce more R&D e®ort than Bertrand competition. However, the price is lower and output is higher in Bertrand than in Cournot competition. Furthermore, the Bertrand equilibrium is more e±cient than the Cournot equilibrium if either R&D productivity is low, spillovers are weak, or products are very di®erent. If R&D productivity is high, spillovers are strong and goods are close substitutes, the Bertrand equilibrium becomes less e±cient than the Cournot equilibrium. JEL Classi ̄cation No.: L13
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