Bertrand Competition with Non-rigid Capacity Constraints
AbstractWe examine a model of Bertrand competition with non-rigid capacity constraints, so that by incurring an additional cost, firms can produce beyond capacity. We find that there is an interval of prices such that a price can be sustained as a pure strategy Nash equilibrium if and only if it lies in this interval. We then examine the properties of this set as (a) the number of firms becomes large and (b) the capacity cost increases.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9172.
Date of creation: Jun 2008
Date of revision:
Other versions of this item:
- Roy Chowdhury, Prabal, 2009. "Bertrand competition with non-rigid capacity constraints," Economics Letters, Elsevier, vol. 103(1), pages 55-58, April.
- Prabal Roy Chowdhury, 2009. "Bertrand competition with non-rigid capacity constraints," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 09-02, Indian Statistical Institute, New Delhi, India.
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-21 (All new papers)
- NEP-BEC-2008-06-21 (Business Economics)
- NEP-COM-2008-06-21 (Industrial Competition)
- NEP-IND-2008-06-21 (Industrial Organization)
- NEP-MIC-2008-06-21 (Microeconomics)
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