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Quality Uncertainty as Resolution of the Bertrand Paradox

Author

Listed:
  • Attila Tasnadi
  • Trenton Smith
  • Andrew Hanks

    (School of Economic Sciences, Washington State University)

Abstract

We show that in a homogeneous-good duopoly market with quality uncertainty and constant unit costs, the Bertrand paradox (i.e., marginal cost pricing) can be avoided.

Suggested Citation

  • Attila Tasnadi & Trenton Smith & Andrew Hanks, 2010. "Quality Uncertainty as Resolution of the Bertrand Paradox," Working Papers 2010-1, School of Economic Sciences, Washington State University.
  • Handle: RePEc:wsu:wpaper:tgsmith-5
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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/TSmith/wp2010-1.pdf
    File Function: First version, 2010
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    Cited by:

    1. Feng Jie Xie & Jing Shi, 2018. "The Evolution of Price Competition Game on Complex Networks," Complexity, Hindawi, vol. 2018, pages 1-13, July.
    2. Makoto Yano & Takashi Komatsubara, 2018. "Price competition or price leadership," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(4), pages 1023-1057, December.
    3. Andrew Hanks & Trenton Smith & Attila Tasnadi, 2010. "Opportunity Knocks: An Economic Analysis of Television Advertisements," Working Papers 2010-18, School of Economic Sciences, Washington State University.

    More about this item

    Keywords

    oligopoly; endogenous preferences; threshold utility;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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