Is there a first-mover advantage in the Bertrand duopoly model with homogenous products?
A) Yes, first-movers always hold the advantage over other firms.
B) Yes, first-movers may have an advantage, but it depends on the model assumptions.
C) No, first-movers cannot choose a profit maximizing quantity because the second-mover can always produce a bit less and earn higher profits.
D) No, the second-mover would be able to set a slightly lower price and capture the full market share.

Question

Quizplus · Accepted Answer

In the Bertrand duopoly model with homogenous products, firms compete on price. The second-mover can observe the first-mover's price and set a slightly lower price to capture the full market share, leaving no first-mover advantage.

Is There a First-Mover Advantage in the Bertrand Duopoly Model