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Limit-pricing as Bertrand equilibrium

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Author Info

  • Prabal Roy Chowdhury

    (CSDILE, School of International Studies , Jawaharlal Nehru University , New Delhi - 110067, INDIA)

Abstract

We 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 Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 19 (2002)
Issue (Month): 4 ()
Pages: 811-822

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Handle: RePEc:spr:joecth:v:19:y:2002:i:4:p:811-822

Note: Received: February 25, 2000; revised version: January 9, 2001
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Related research

Keywords: Limit-pricing; Bertrand equilibrium; Increasing returns to scale; Perfect equilibrium.;

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Cited by:
  1. Germán Coloma, 2010. "El número óptimo de empresas bajo competencia de Bertrand," Estudios de Economia, University of Chile, Department of Economics, vol. 37(2 Year 20), pages 189-205, December.
  2. Prabal Roy Chowdhury, 2004. "Bertrand-Edgeworth equilibrium with a large number of firms," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-12, Indian Statistical Institute, New Delhi, India.
  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. repec:ebl:ecbull:v:12:y:2008:i:29:p:1-8 is not listed on IDEAS
  5. Zhang, Zibin & Vedenov, Dmitry V. & Wetzstein, Michael E., 2007. "Can the U.S. Ethanol Industry Compete in the Alternative Fuels' Market?," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34867, Southern Agricultural Economics Association.

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