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:

Receiving Report

A document that records the details of goods received by a business, often used to verify shipments and to match with purchase orders.

Vendor's Invoice

An itemized bill provided by a supplier indicating the products or services provided, their quantities, and prices.

Inventory System

A method or software used by organizations to track inventory levels, orders, sales, and deliveries.

Physical Inventory

A process where a business counts its entire inventory by hand at a specific point in time to verify stock quantities.