Comparing Bertrand and Cournot Equilibria: A Geometric Approach
AbstractBy presenting a geometric analysis of a duopoly, this article attempts to provide some insights into recent results by Singh and Vives regarding Bertrand and Cournot equilibria and the relative dominance of price and quantity strategies. It shows that under fairly general and reasonable assumptions (a) Cournot equilibrium prices (quantities) are higher than Bertrand equilibrium prices (quantities) and (b) a quantity (price) strategy dominates a price (quantity) strategy if the goods are substitutes (complements).
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 16 (1985)
Issue (Month): 1 (Spring)
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Web page: http://www.rje.org
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- Rupayan Pal, . "The Cournot-Bertrand profit differential: A Reversal result in network goods duopoly," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-014, Indira Gandhi Institute of Development Research, Mumbai, India.
- Sherrill Shaffer, 2008. "Earnings Valuation And Sources Of Growth," CAMA Working Papers 2008-32, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Dale W. Henderson & Ning S. Zhu, 1995. "Uncertainty, instrument choice, and the uniqueness of Nash equilibrium: microeconomic and macroeconomic examples," International Finance Discussion Papers 526, Board of Governors of the Federal Reserve System (U.S.).
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