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The Comparison of Entry Deterrence Between Cournot And Bertrand Competition

Author

Listed:
  • Jinyoung Lee

    (Sogang University)

  • Gyu Ho Wang

    (Sogang University)

Abstract

We compare the incentive of an incumbent monopolist to deter the entry between Cournot and Bertrand competition in differentiated product markets. It is first shown that unless the products are perfect substitutes, the incumbent can block the entry more easily under Cournot competition than under Bertrand competition. For the entry deterrence, as long as the products are differentiated to some degree, like the blockaded entry, the incumbent would like to deter the entry more under Cournot competition than under Bertrand competition. However, if the product differentiation is quite small, the incumbent can deter the entry more easily under Bertrand competition than in the Cournot competition.

Suggested Citation

  • Jinyoung Lee & Gyu Ho Wang, 2007. "The Comparison of Entry Deterrence Between Cournot And Bertrand Competition," Korean Economic Review, Korean Economic Association, vol. 23, pages 33-48.
    • Handle: RePEc:kea:keappr:ker-200706-23-1-02
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cournot competition; Bertrand competition; Blockaded entry; Deterred entry; Accommodated entry;
    All these keywords.

    JEL classification:

    • 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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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