Resum:
We consider a linear price setting duopoly game with di®erentiated
products and determine endogenously which of the players will lead and
which will follow. While the follower role is most attractive for each
firm, we show that waiting is more risky for the low cost firm so that,
consequently, risk dominance considerations, as in Harsanyi and Selten
(1988), allow the conclusion that only the high cost firm will choose to
wait. Hence, the low cost firm will emerge as the endogenous price leader.