Endogenous price leadership and technological differences |
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Authors: | Makoto Yano Takashi Komatsubara |
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Institution: | Makoto Yano, Faculty of Economics, Keio University, Tokyo, Japan. Email:;Graduate School of Economics, Keio University, Tokyo, Japan. |
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Abstract: | This study constructs a two-stage game of price leadership in a duopolistic market for a homogeneous product. In the first period, the two firms determine a price leader; they set a price for the product in the second period. It is demonstrated in the present study that the technologically superior firm tends to become a price leader. This result reveals that price leadership is determined by the interaction of "competitive force", which prevents the price leader from choosing too high a price (like the joint profit maximizing price or the cartel price), and "collusive force", which prevents a price from falling to a Bertrand price. |
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Keywords: | price leadership technological differences competition antitrust law |
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