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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- 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.
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