Free Entry Bertrand Competition
AbstractThis paper examines Bertrand competition under free entry, when firm size vis-a-vis market size is exogenously given. A free entry Bertrand Nash equilibrium (FEBE) exists if and only if relative market size is sufficiently large. Further, there is a unique coalition-proof Nash equilibrium price that corresponds to the minimum FEBE price, leads to average cost pricing for all active firms and is decreasing in market size.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17837.
Date of creation: Oct 2009
Date of revision:
Bertrand competition; free entry; coalition-proof; contestability;
Find related papers by JEL classification:
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-17 (All new papers)
- NEP-COM-2009-10-17 (Industrial Competition)
- NEP-ENT-2009-10-17 (Entrepreneurship)
- NEP-REG-2009-10-17 (Regulation)
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