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Iterated Elimination of Dominated Strategies in a Bertrand-Edgeworth Model

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  • Borgers, Tilman

Abstract

The author considers a Bertrand-Edgeworth model of price competition. Firms have identical and constant marginal costs and finite exogenous capacities. Firms choose prices. The author's interest is in the set of those prices which are left over after the iterated elimination of dominated strategies. The author shows that in two circumstances this set will be close to the set containing only the market-clearing (Walrasian) price: (1) if any n - 1 out of n firms assumed to be in the market have sufficient capacity to cover demand at marginal costs; (2) if any given total capacity is owned by a very large number of very small firms. Copyright 1992 by The Review of Economic Studies Limited.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 59 (1992)
Issue (Month): 1 (January)
Pages: 163-76

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Handle: RePEc:bla:restud:v:59:y:1992:i:1:p:163-76

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Cited by:
  1. Mariotti, Marco, 2000. "Maximum Games, Dominance Solvability, and Coordination," Games and Economic Behavior, Elsevier, vol. 31(1), pages 97-105, April.
  2. Dhillon, A. & Lockwood, B., 1999. "When are Plurality Rule Voting Games Dominance-Solvable?," The Warwick Economics Research Paper Series (TWERPS) 549, University of Warwick, Department of Economics.
  3. Börgers, Tilman & Janssen, Maarten C.W., 1995. "On the dominance solvability of large cournot games," Games and Economic Behavior, Elsevier, vol. 8(2), pages 297-321.
  4. Canoy, Marcel & Weddepohl, Claus, 1995. "Alternative conjectures in a Bertrand-Edgeworth model," European Journal of Political Economy, Elsevier, vol. 11(3), pages 577-598, September.
  5. Giuseppe Moscarini & Marco Ottaviani, 1998. "Price Competition for an Informed Buyer," Cowles Foundation Discussion Papers 1199, Cowles Foundation for Research in Economics, Yale University.
  6. repec:hal:wpaper:halshs-00590856 is not listed on IDEAS
  7. Roy Chowdhury, Prabal, 2008. "Bertrand-Edgeworth equilibrium with a large number of firms," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 746-761, May.
  8. García Díaz, Antón & Hernán González, Roberto & Kujal, Praveen, 2009. "List pricing and discounting in a Bertrand-Edgeworth duopoly," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 719-727, November.
  9. Roberts Waddle, 2005. "Strategic Profit Sharing Between Firms: The Bertrand Model," Economics Working Papers we050902, Universidad Carlos III, Departamento de Economía.
  10. Erdem Basci & Ismail Saðlam, 2001. "Bertrand-Edgeworth Equilibrium in a Cash-Advance Economy," Departmental Working Papers 0104, Bilkent University, Department of Economics.
  11. Guesnerie, R., 1993. "Est-il rationnel d'avoir des anticipations rationnelles ?," DELTA Working Papers 93-05, DELTA (Ecole normale supérieure).
  12. Tasnádi, Attila, 2001. "A Bertrand-Edgeworth-oligopóliumok. Irodalmi áttekintés
    [Bertrand-Edgeworth oligopolies - a survey of the literature]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1081-1092.
  13. Antón García Díaz & Praveen Kujal, 2003. "List Pricing And Pure Strategy Outcomes In A Bertrand-Edgeworth Duopoly," Economics Working Papers we034918, Universidad Carlos III, Departamento de Economía.
  14. Germano, Fabrizio, 2003. "Bertrand-edgeworth equilibria in finite exchange economies," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 677-692, July.
  15. Moulin, Hervé & Velez, Rodrigo A., 2013. "The price of imperfect competition for a spanning network," Games and Economic Behavior, Elsevier, vol. 81(C), pages 11-26.

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