On the Efficiency of Bertrand and Cournot Competition with Incomplete Information
AbstractIt is a well established idea that Bertrand competition is more efficient in welfare terms than Cournot competition regardless of the degree of substituability or complementary of the commodities produced by the firms. In this paper I show that, introducing incomplete information abour rivals' costs of production this conclusion does not always hold : in a homogeneous duopoly, the Bertrand price is higher than the Cournot one if both firms have low costs of production and the costs are uniformly distributed.
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Bibliographic InfoPaper provided by European University Institute in its series Economics Working Papers with number eco96/33.
Length: 16 pages
Date of creation: 1996
Date of revision:
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OLIGOPOLIES ; PRODUCTION ; PRODUCTION COSTS ; ECONOMIC MODELS;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
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