Cournot establishes a Nash equilibrium to a duopoly game under output competition; Bertrand finds a different Nash equilibrium under price competition. Both treat the strategic choice variable (output versus price) and the timing of play as exogenous. We investigate Cournot-Bertrand models where one firm competes in output and the other competes in price in both static and dynamic settings. We also develop a general model where both the timing of play and the strategic choice variables are endogenous. Consistent with the conduct of Honda and Scion, we show that Cournot-Bertrand behaviour can be a Nash equilibrium outcome.

No abstract

In this paper, we analyze how generic advertising affects brand advertising and firm profits in differentiated oligopoly markets. We show that in the Crespi (2007) model only the high quality firm will use brand advertising when differentiation is vertical. We also demonstrate that when differentiation is horizontal, the equilibrium is likely to be more symmetric in terms of firm profits, spending on brand advertising, and firm response to generic advertising. Finally, we point out that generic advertising will increase expenditures on brand advertising when firms play a supermodular game. The results confirm that there are many reasons why generic advertising may increase firm spending on brand advertising.

This paper analyzes the interactions between generic advertising, brand advertising, and firm profits when brand advertising is purely informative. We develop duopoly models with vertical and horizontal differentiation when brand advertising lowers consumer search costs of identifying brand characteristics. The model demonstrates that firms can benefit from investing in brand advertising that lowers consumer search costs as well as from brand advertising that is purely persuasive. In addition, the results demonstrate that regardless of whether brand advertising is persuasive or informative, the outcome is more likely to be symmetric with horizontal differentiation than with vertical differentiation. The key distinction between this model and that of previous studies is that brand advertising across rivals is a strategic complement when persuasive and a strategic substitute when informative.