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:

Sphenoid

A bone that forms part of the floor of the cranium.

Parietal

Relating to the parietal lobes of the brain, which process sensory information like touch, pressure, and temperature.

Occipital

Pertaining to the occiput, the back part of the skull or head, often relating to the visual processing center of the brain.

Temporal

Relating to time or the timing of events, or to the temples of the skull.