Price and quantity experimentation: A synthesis

Belleflamme, Paul;Bloch, Francis
(2001) International Journal of Industrial Organization — Vol. 19, n° 10, p. 1563-1582 (2001)

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This paper compares experimentation about product differentiation in a linear setting under four market structures: quantity-setting and price-setting monopoly, Cournot and Bertrand duopoly. Quantity-setting firms always experiment by raising their quantities and the monopolist experiments relatively more than the duopolists. A price-setting monopolist does not experiment. The value of information to Bertrand duopolists may be positive or negative depending on the degree of product differentiation. When information is valuable, price-setting duopolists experiment by lowering prices. A numerical example indicates that the intensity of experimentation is higher in a Cournot duopoly than in a Bertrand duopoly. (C) 2001 Elsevier Science BY All rights reserved.
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Belleflamme, P., & Bloch, F. (2001). Price and quantity experimentation: A synthesis. International Journal of Industrial Organization, 19(10), 1563-1582. https://doi.org/10.1016/S0167-7187(00)00062-X (Original work published 2001)