Advanced Search
MyIDEAS: Login to save this article or follow this journal

Bertrand-Edgeworth equilibrium with a large number of firms

Contents:

Author Info

  • Roy Chowdhury, Prabal

Abstract

We examine a model of price competition with strictly convex costs where the firms simultaneously decide on both price and quantity, are free to supply less than the quantity demanded, and there is discrete pricing. If firms are symmetric then, for a large class of residual demand functions, there is a unique equilibrium in pure strategies whenever, for a fixed grid size, the number of firms is sufficiently large. Moreover, this equilibrium price is within a grid-unit of the competitive price. The results go through to a large extent when the firms are asymmetric, or they are symmetric but play a two-stage game and the tie-breaking rule is 'weakly manipulable'.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6V8P-4P61N2J-1/1/03b26e55c0cc8ebbaa00d607ad6cf216
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 26 (2008)
Issue (Month): 3 (May)
Pages: 746-761

as in new window
Handle: RePEc:eee:indorg:v:26:y:2008:i:3:p:746-761

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Prabal Roy Chowdhury, 2004. "Bertrand-Edgeworth equilibrium: Manipulable residual demand," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-15, Indian Statistical Institute, New Delhi, India.
  2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  3. Dixon, Huw David, 1992. "The Competitive Outcome as the Equilibrium in an Edgeworthian Price-Quantity Model," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(411), pages 301-09, March.
  4. Simon, Leo K., 1987. "Bertrand price competition with differentiated commodities," Journal of Economic Theory, Elsevier, vol. 41(2), pages 304-332, April.
  5. Dasgupta, Partha & Maskin, Eric, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(1), pages 1-26, January.
  6. Osborne, Martin J. & Pitchik, Carolyn, 1986. "Price competition in a capacity-constrained duopoly," Journal of Economic Theory, Elsevier, vol. 38(2), pages 238-260, April.
  7. Mandy, David M, 1992. "Nonuniform Bertrand Competition," Econometrica, Econometric Society, Econometric Society, vol. 60(6), pages 1293-30, November.
  8. Dan Kovenock & Raymond J. Deneckere, 1996. "Bertrand-Edgeworth duopoly with unit cost asymmetry (*)," Economic Theory, Springer, vol. 8(1), pages 1-25.
  9. Novshek, William & Chowdhury, Prabal Roy, 2003. "Bertrand equilibria with entry: limit results," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(6), pages 795-808, June.
  10. Dubey, Pradeep, 1982. "Price-Quantity Strategic Market Games," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 111-26, January.
  11. Novshek, William & Sonnenschein, Hugo, 1983. "Walrasian equilibria as limits of noncooperative equilibria. Part II: Pure strategies," Journal of Economic Theory, Elsevier, vol. 30(1), pages 171-187, June.
  12. Mestelman, Stuart & Welland, Deborah & Welland, Douglas, 1987. "Advance production in posted offer markets," Journal of Economic Behavior & Organization, Elsevier, vol. 8(2), pages 249-264, June.
  13. Dasgupta, Partha & Maskin, Eric, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, II: Applications," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(1), pages 27-41, January.
  14. Dastidar, Krishnendu Ghosh, 1995. "On the Existence of Pure Strategy Bertrand Equilibrium," Economic Theory, Springer, vol. 5(1), pages 19-32, January.
  15. Dixon, Huw David, 1993. "Integer Pricing and Bertrand-Edgeworth Oligopoly with Strictly Convex Costs: Is It Worth More Than a Penny?," Bulletin of Economic Research, Wiley Blackwell, vol. 45(3), pages 257-68, July.
  16. Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, Econometric Society, vol. 56(3), pages 571-99, May.
  17. Prabal Roy Chowdhury, 2002. "Limit-pricing as Bertrand equilibrium," Economic Theory, Springer, vol. 19(4), pages 811-822.
  18. Dixon, Huw, 1987. "Approximate Bertrand Equilibria in a Replicated Industry," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(1), pages 47-62, January.
  19. Allen, Beth & Hellwig, Martin, 1986. "Bertrand-Edgeworth Oligopoly in Large Markets," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(2), pages 175-204, April.
  20. Richard E. Levitan & Martin Shubik, 1970. "Price Duopoly and Capacity Constraints," Cowles Foundation Discussion Papers 287, Cowles Foundation for Research in Economics, Yale University.
  21. Borgers, Tilman, 1992. "Iterated Elimination of Dominated Strategies in a Bertrand-Edgeworth Model," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 59(1), pages 163-76, January.
  22. Vives, Xavier, 1986. "Rationing rules and Bertrand-Edgeworth equilibria in large markets," Economics Letters, Elsevier, vol. 21(2), pages 113-116.
  23. Chaudhuri, Prabal Ray, 1996. "The contestable outcome as a Bertrand equilibrium," Economics Letters, Elsevier, vol. 50(2), pages 237-242, February.
  24. Simon, Leo K, 1984. "Bertrand, the Cournot Paradigm and the Theory of Perfect Competition," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 51(2), pages 209-30, April.
  25. Tasnadi, Attila, 1999. "A two-stage Bertrand-Edgeworth game," Economics Letters, Elsevier, vol. 65(3), pages 353-358, December.
  26. Ruffin, R J, 1971. "Cournot Oligopoly and Competitive Behaviour," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 38(116), pages 493-502, October.
  27. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
  28. Novshek, William, 1980. "Cournot Equilibrium with Free Entry," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(3), pages 473-86, April.
  29. Grossman, Sanford J, 1981. "Nash Equilibrium and the Industrial Organization of Markets with Large Fixed Costs," Econometrica, Econometric Society, Econometric Society, vol. 49(5), pages 1149-72, September.
  30. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
  31. Dixon, Huw, 1990. "Bertrand-Edgeworth Equilibria when Firms Avoid Turning Customers Away," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 131-46, December.
  32. Maskin, Eric, 1986. "The Existence of Equilibrium with Price-Setting Firms," American Economic Review, American Economic Association, vol. 76(2), pages 382-86, May.
  33. Allen, Beth & Hellwig, Martin, 1993. "Bertrand-Edgeworth Duopoly with Proportional Residual Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 39-60, February.
  34. Carl Davidson & Raymond Deneckere, 1986. "Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 404-415, Autumn.
  35. Chowdhury, Prabal Roy, 1999. "Bertrand-Edgeworth equilibria with unobservable output, uncoordinated consumers and large number of firms," Economics Letters, Elsevier, vol. 63(2), pages 207-211, May.
  36. Dixon, Huw, 1984. "The existence of mixed-strategy equilibria in a price-setting oligopoly with convex costs," Economics Letters, Elsevier, vol. 16(3-4), pages 205-212.
  37. Tasnadi, Attila, 1999. "Existence of pure strategy Nash equilibrium in Bertrand-Edgeworth oligopolies," Economics Letters, Elsevier, vol. 63(2), pages 201-206, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. repec:ebl:ecbull:v:12:y:2008:i:29:p:1-8 is not listed on IDEAS
  2. Hirata, Daisuke, 2008. "Bertrand-Edgeworth Equilibrium in Oligopoly," MPRA Paper 7946, University Library of Munich, Germany.
  3. Massimo A. De Francesco, 2008. "Existence of pure strategy equilibrium in Bertrand-Edgeworth games with imperfect divisibility of money," Economics Bulletin, AccessEcon, vol. 12(29), pages 1-8.
  4. De Francesco, Massimo A., 2008. "Existence of pure strategy equilibria in Bertrand-Edgeworth games with imperfect divisibility of money," MPRA Paper 10826, University Library of Munich, Germany.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Bertrand–Edgeworth model in Wikipedia English ne '')

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:26:y:2008:i:3:p:746-761. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.