Template-Type: ReDIF-Paper 1.0

Author-Name: Markus Reisinger
Author-X-Name-First: Markus
Author-X-Name-Last: Reisinger

Author-Name: Ludwig Ressner
Author-X-Name-First: Ludwig
Author-X-Name-Last: Ressner

Title: Dynamic Duopoly with Inattentive Firms
	
Abstract: This paper analyzes an infinite horizon dynamic duopoly with stochastic
demand in which firms face costs of absorbing and processing information.
Our main result is that the structure of dates at which firms
choose to absorb information differ starkly between price and quantity
competition. Firms synchronize their actions under price competition
whereas they plan sequentially and in an alternating manner under
quantity competition. The reason is that under quantity competition
the planning firm reduces the uncertainty in the residual demand curve
of the inattentive firm which renders planning less attractive for that
firm. The opposite holds true under price competition.
Length:  38 pages
Creation-Date:  2008-06
File-URL: http://www.bgpe.de/texte/DP/058_ressner.pdf
File-Format: Application/pdf
File-Function: First version, 2008
Number: 058
Classification-JEL: C73, D43, D83
Keywords: Inattentiveness, Price Competition, Quantity Competition, Synchronization
Handle: RePEc:bav:wpaper:058_ressner