This paper analyses a model of vertical product differentiation with one incumbent and one entrant firm. It is shown that if firms can produce only one quality level welfare in this entry game can be lower than in monopoly. This is the case if qualities are strategic complements because the...

We analyze duopoly Bertrand competition under network effects. We consider both incompatible and compatible products. Our main result is that network effects create a fundamental conflict between the maximization of social welfare and consumer surplus whenever products are incompatible. While...

We examine whether owners' decisions to delegate responsibilities to overconfident managers improve welfare. We develop a duopoly model with product differentiation, where firms compete in research and development (R&D) and output . Before firms compete, each owner makes a strategic decision...

We derive Bertrand and Cournot equilibria in a differentiated duopoly in which each firm hires a manager to undertake research and development (R&D) and production decisions. We show that manager overconfidence and over-investment occur in each market competition. Furthermore, the Cournot game...

This paper shows the strategic aspects of international outsourcing in a duopolistic market. Due to different costs of integrated production and outsourcing, the choice of a firm influences the strategy of the competitor via the output price. Therefore, the resulting market constellation depends...

We analyze the role of consumer expectations in a Hotelling model of price competition when products exhibit network effects. Expectations can be strong (stubborn), weak (price-sensitive) or partially stubborn (a mix of weak and strong). As a rule, the price-sensitivity of demand declines when...

This paper aims at participating in the long-lasting debate about the analytical foundations of the Cournot equilibrium. In a homogeneous oligopoly, under standard regularity conditions, we prove that Cournot-Nash emerges both under (i) price competition and Cournot conjectures; and (ii) supply...

In the European Union the commission has the primary right to decide about industrial policy. Note that this includes the possibility to allow actions of member countries as long as these are not in conflict with the interest of the EU. This paper deals with the question whether such an...

In this paper we consider Voluntary Agreements (VAs) as an information-sharing device. In a duopoly model firms compete a la Cournot and aim to reduce environmental damages because consumers have green preferences that partially internalise negative externalities. However both firms are...