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Bertrand-Edgeworth equilibrium with a large number of firms

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  • Prabal Roy Chowdhury

    ()
    (Indian Statistical Institute, New Delhi)

Abstract

We examine a model of price competition where the firms simultaneously decide on both price and quantity, and are free to supply less than the quantity demanded. We demonstrate that if the tie-breaking rule is `non-manipulable', then, for a large class of rationing rules, there is a unique equilibrium in pure strategies whenever the number of firms is large enough. We then show that the `folk theorem' of perfect competition holds. Finally, we examine if the results go through when the firms are asymmetric, or produce to order.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 04-12.

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Length: 29 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:ind:isipdp:04-12

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Keywords: Bertrand equilibrium; pure strategy; non-manipulable tiebreaking rule;

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Cited by:
  1. repec:ebl:ecbull:v:12:y:2008:i:29:p:1-8 is not listed on IDEAS
  2. 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.
  3. Hirata, Daisuke, 2008. "Bertrand-Edgeworth Equilibrium in Oligopoly," MPRA Paper 7946, University Library of Munich, Germany.
  4. De Francesco, Massimo A., 2008. "Existence of pure strategy equilibria in Bertrand-Edgeworth games with imperfect divisibility of money," MPRA Paper 10826, University Library of Munich, Germany.

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