This paper analyzes a duopoly model with stochastic demand in which firms first choose their strategy variable and compete afterwards. Contrary to the existing literature, we show that firms do not always choose a quantity which is the variable that induces a smaller degree of competition. The...

If duopolistic firms can choose their strategy variable, uncertainty about demand conditions and the degree of substitutability have countervailing effects on variable choice. High uncertainty favors prices, while close substitutability favors quantities. For intermediate values, a hybrid...