Bertrand-Edgeworth duopoly with linear costs: A tale of two paradoxes
AbstractConsider a Bertrand-Edgeworth duopoly with linear cost functions. If the firms produce to stock then no Nash equilibrium in pure strategies exists. If, however, the firms produce to order then all subgame perfect Nash equilibria involve the firms charging a price equal to marginal cost.
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Bibliographic InfoPaper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 04-13.
Length: 11 pages
Date of creation: Feb 2004
Date of revision:
Bertrand paradox; Edgeworth paradox; linear cost;
Other versions of this item:
- Chowdhury, Prabal Roy, 2005. "Bertrand-Edgeworth duopoly with linear costs: A tale of two paradoxes," Economics Letters, Elsevier, vol. 88(1), pages 61-65, July.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-02 (All new papers)
- NEP-COM-2004-06-02 (Industrial Competition)
- NEP-IND-2004-06-22 (Industrial Organization)
- NEP-MIC-2004-06-02 (Microeconomics)
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