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Abstract

This paper compares experimentation about product differentiation in a linear setting under four market structures: quantity-setting and price-setting monopoly, Cournot and Bertrand duopoly. Quantity-setting firms always experiment by raising their quantities and the monopolist experiments relatively more than the duopolists. A price-setting monopolist does not experiment. The value of information to Bertrand duopolists may be positive or negative depending on the degree of product differentiation. When information is valuable, price-setting duopolists experiment by lowering prices. A numerical example indicates that the intensity of experimentation is higher in a Cournot duopoly than in a Bertrand duopoly.

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... 2) In this model, the rate of transportation costs t is quadratic. We suppose that the firms I and II declare the prices for the products as i p and the quality as i q ( 1,2) i = . So the utility difference can be denoted by following function ...
... So all customers are divided for two parts respectively their preferences to firms I and II in 'Linear City'. So the demands of the firms I and II ( 1,2) i i D = can be determined by functions ...
... We don't repeat here. If (1 ) (1 ) t b a d p q t b a d − + − ∆ ≤ ∆ ≤ ∆ + − + ∆ , the two firms occupy the market jointly, it is also divided into three cases: ...
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Market learning and price dispersion. Mimeo. Department of Economics, University of Valencia Duopoly experimentation: Cournot competition
  • M D Alepuz
  • A P Urbano
  • F Belleflamme
Alepuz, M.D., Urbano, A., 1994. Market learning and price dispersion. Mimeo. Department of Economics, University of Valencia. r1582 P. Belleflamme, F. Bloch / Int. J. Ind. Organ. 19 (2001) 1563–1582 Alepuz, M.D., Urbano, A., 1999. Duopoly experimentation: Cournot competition. Mathematical Social Sciences 37, 165–188
Market learning and price dispersion. Mimeo. Department of Economics
  • M D Alepuz
  • A Urbano
Alepuz, M.D., Urbano, A., 1994. Market learning and price dispersion. Mimeo. Department of Economics, University of Valencia. P. Belleflamme, F. Bloch / Int. J. Ind. Organ. 19 (2001) 1563 –1582
  • P Belleflamme
  • F Bloch
P. Belleflamme, F. Bloch / Int. J. Ind. Organ. 19 (2001) 1563 –1582