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Can Bertrand and Cournot oligopolies be combined?

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  • Puu, Tonu
  • Tramontana, Fabio

Abstract

There have been some recent attempts to combine Cournot and Bertrand duopolies in one single model. Unfortunately, these attempts do not work. A commodity cannot be homogenous and non-homogenous at the same time. It is always the consumers, who decide whether they perceive competing products as identical or as different brands for which they are willing to pay different prices. There is, of course, nothing that forbids the coexistence of both such consumer groups. Neither is there any obstacle for the competing sellers to sell to both markets. Then we only need an old idea from economic theory, i.e., price discrimination, to rectify the logic. By this the challenging combination idea comes on a stable footing. The model also results in some interesting mathematical facts, such as mulistability and coexistence of attractors.

Suggested Citation

  • Puu, Tonu & Tramontana, Fabio, 2019. "Can Bertrand and Cournot oligopolies be combined?," Chaos, Solitons & Fractals, Elsevier, vol. 125(C), pages 97-107.
  • Handle: RePEc:eee:chsofr:v:125:y:2019:i:c:p:97-107
    DOI: 10.1016/j.chaos.2019.05.026
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    Cited by:

    1. Ciprian Rusescu & Mihai Daniel - Roman, 2021. "Dynamic Behaviour In A Bertrand Model With Bounded Rational Players," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 45-55, June.
    2. Agliari, Anna & Pecora, Nicolò & Szuz, Alina, 2022. "Appearance of closed invariant curves in a piecewise Cournot model with advertising," Chaos, Solitons & Fractals, Elsevier, vol. 158(C).
    3. Yu, Yu & Yu, Weisheng, 2021. "The stability and duality of dynamic Cournot and Bertrand duopoly model with comprehensive preference," Applied Mathematics and Computation, Elsevier, vol. 395(C).
    4. Garmani, Hamid & Ait Omar, Driss & El Amrani, Mohamed & Baslam, Mohamed & Jourhmane, Mostafa, 2020. "Analysis of a dynamics duopoly game with two content providers," Chaos, Solitons & Fractals, Elsevier, vol. 131(C).
    5. Zhu, Yan-lan & Zhou, Wei & Chu, Tong, 2022. "Analysis of complex dynamical behavior in a mixed duopoly model with heterogeneous goods," Chaos, Solitons & Fractals, Elsevier, vol. 159(C).
    6. Li, Bo & Liang, Houjun & Shi, Lian & He, Qizhi, 2022. "Complex dynamics of Kopel model with nonsymmetric response between oligopolists," Chaos, Solitons & Fractals, Elsevier, vol. 156(C).

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    More about this item

    Keywords

    Cournot–Bertrand; Price discrimination; Global analysis; Local bifurcations;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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