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Asymmetric Bertrand-Edgeworth Oligopoly and Mergers

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  • Hirata Daisuke

    ()
    (The University of Tokyo)

Abstract

This 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 Info

Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 9 (2009)
Issue (Month): 1 (July)
Pages: 1-25

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Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:22

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Cited by:
  1. 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.
  2. Tasnádi, Attila, 2012. "Endogenous Timing of Moves in Bertrand-Edgeworth Triopolies," MPRA Paper 47610, University Library of Munich, Germany.
  3. 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.
  4. 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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