Limit-pricing as Bertrand equilibrium
AbstractWe consider a Bertrand duopoly model with increasing returns to scale where one of the firms have a cost advantage and prices vary over a grid. We find that typically more than one equilibria exist. However, there are only two perfect equilibria. Moreover, as the size of the grid becomes small, both these equilibria converge to the limit-pricing outcome.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 19 (2002)
Issue (Month): 4 ()
Note: Received: February 25, 2000; revised version: January 9, 2001
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Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - 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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