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Divisionalisation and Cournot Competition Yield Bertrand Outcomes

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  • Lasheng Yuan

Abstract

Bertrand and Cournot model are the main frameworks in the analysis of oligopolistic competition. The outcomes from them are however different. Using a simultaneous‐move two‐stage game, this article shows that, in a homogeneous product market with fairly general demand, the Bertrand outcomes can be achieved by a combination of divisionalisation and ensuing Cournot competition. This finding can be viewed as an extension to or complements of Kreps and Scheinkman (1983), who show that Cournot outcomes can be achieved by quantity precommitment and Bertrand competition.

Suggested Citation

  • Lasheng Yuan, 2001. "Divisionalisation and Cournot Competition Yield Bertrand Outcomes," Australian Economic Papers, Wiley Blackwell, vol. 40(1), pages 22-29, March.
    • Handle: RePEc:bla:ausecp:v:40:y:2001:i:1:p:22-29
    DOI: 10.1111/1467-8454.00110
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