Asymmetric Bertrand-Edgeworth Oligopoly and Mergers
AbstractThis paper investigates mixed strategy equilibria in a capacity-constrained price competition among three firms. It is shown that the equilibria in an asymmetric oligopoly are substantially different from those in a duopoly and symmetric oligopoly. In an asymmetric triopoly, it is possible that (i) a continuum of equilibria exists and that (ii) the lowest price of the smallest firm is higher than that of the others and the smallest firm earns more than the max-min profit in undominated strategies. In particular, the second finding sheds light on a new pricing incentive in Bertrand competitions. As an application, the equilibrium characterizations give rise to a new class of merger paradoxes.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.
Volume (Year): 9 (2009)
Issue (Month): 1 (July)
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Web page: http://www.degruyter.com
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- Tamás Balogh & Attila Tasnádi, 2012.
"Does timing of decisions in a mixed duopoly matter?,"
Journal of Economics,
Springer, vol. 106(3), pages 233-249, July.
- Balogh, Tamás L. & Tasnádi, Attila, 2011. "Does timing of decisions in a mixed duopoly matter?," MPRA Paper 30993, University Library of Munich, Germany.
- Tasnádi, Attila, 2012. "Endogenous Timing of Moves in Bertrand-Edgeworth Triopolies," MPRA Paper 47610, University Library of Munich, Germany.
- Massimo A. De Francesco, 2009. "A dynamic entry and price game with capacity indivisibility," Department of Economics University of Siena 577, Department of Economics, University of Siena.
- De Francesco, Massimo A. & Salvadori, Neri, 2010. "Bertrand-Edgeworth competition in an almost symmetric oligopoly," MPRA Paper 24228, University Library of Munich, Germany.
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