Limit-pricing as Bertrand equilibrium

We consider a Bertrand duopoly model with increasing returns to scale where one of the firms have a cost advantage and prices vary over a grid. We find that typically more than one equilibria exist. However, there are only two perfect equilibria. Moreover, as the size of the grid becomes small, both these equilibria converge to the limit-pricing outcome.

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Year of publication:	2002-02-06
Authors:	Chowdhury, Prabal Roy
Published in:	Economic Theory. - Springer. - Vol. 19.2002, 4, p. 811-822
Publisher:	Springer
Subject:	Limit-pricing \| Bertrand equilibrium \| Increasing returns to scale \| Perfect equilibrium

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Extent:	application/pdf
Type of publication:	Article
Notes:	Received: February 25, 2000; revised version: January 9, 2001
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; L13 - Oligopoly and Other Imperfect Markets
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005370988