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Bertrand competition with asymmetric costs: a solution in pure strategies

Author

Listed:
  • Thomas Demuynck

    (Ecares, Université Libre de Bruxelles)

  • P. Jean-Jacques Herings

    (Maastricht University)

  • Riccardo D. Saulle

    (Maastricht University
    Sapienza University of Rome)

  • Christian Seel

    (Maastricht University)

Abstract

We consider a Bertrand duopoly with homogeneous goods and we allow for asymmetric marginal costs. We derive the Myopic Stable Set in pure strategies as introduced by Demuynck et al. (Econometrica 87:111–138, 2019). In contrast to the set of Nash equilibria, the unique Myopic Stable Set can be easily characterized in closed form and it provides an intuitive set-valued prediction.

Suggested Citation

  • Thomas Demuynck & P. Jean-Jacques Herings & Riccardo D. Saulle & Christian Seel, 2019. "Bertrand competition with asymmetric costs: a solution in pure strategies," Theory and Decision, Springer, vol. 87(2), pages 147-154, September.
    • Handle: RePEc:kap:theord:v:87:y:2019:i:2:d:10.1007_s11238-019-09698-4
    DOI: 10.1007/s11238-019-09698-4
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    References listed on IDEAS

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    1. Kartik, Navin, 2011. "A note on undominated Bertrand equilibria," Economics Letters, Elsevier, vol. 111(2), pages 125-126, May.
    2. Thomas Demuynck & P. Jean‐Jacques Herings & Riccardo D. Saulle & Christian Seel, 2019. "The Myopic Stable Set for Social Environments," Econometrica, Econometric Society, vol. 87(1), pages 111-138, January.
    3. Blume, Andreas, 2003. "Bertrand without fudge," Economics Letters, Elsevier, vol. 78(2), pages 167-168, February.
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    Cited by:

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    2. Soeren C. Schwuchow, 2023. "Organized crime as a link between inequality and corruption," European Journal of Law and Economics, Springer, vol. 55(3), pages 469-509, June.

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    More about this item

    Keywords

    Bertrand competition; Asymmetric costs; Myopic stable set;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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