Bertrand-Edgeworth Equilibrium in Oligopoly
AbstractThis paper investigates simultaneous move capacity constrained price competition game among three firms. I find that equilibria in an asymmetric oligopoly are substantially different from those in the duopoly and symmetric oligopoly. I characterize mixed strategy equilibria and show there exist possibilities of i) the existence of a continuum of equilibria ii) the smallest firm earning the largest profit per capacity and iii) non-identical supports of equilibrium mixed strategies, all of which never arise either in the duopoly or symmetric oligopoly. In particular, the second finding sheds light on a completely new pricing incentive in Bertrand competitions.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7946.
Date of creation: Mar 2008
Date of revision:
Price Competition; Oligopoly; Capacity Constraint; Homogeneous Goods;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-15 (All new papers)
- NEP-COM-2008-04-15 (Industrial Competition)
- NEP-IND-2008-04-15 (Industrial Organization)
- NEP-MIC-2008-04-15 (Microeconomics)
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