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

question 78

Multiple Choice

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.

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Definitions:

Prefrontal Cortex

The part of the brain located at the front of the frontal lobes, associated with decision making, cognitive behavior, personality expression, and social behavior.

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Specialized knowledge or skills in the design and construction of buildings or structures, focusing on aspects such as aesthetics, functionality, and safety.

Amygdala

An area of brain tissue, with extensive connections to the olfactory system and hypothalamus, thought to be involved in mood, feeling, instinct, and short-term memory.

Cerebellum

Part of the brain that controls balance and muscular coordination.