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Integer Pricing and Bertrand-Edgeworth Oligopoly with Strictly Convex Costs: Is It Worth More Than a Penny?

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  • Dixon, Huw David

Abstract

In this paper we analyze the implications of integer pricing for Bertrand Edgeworth oligopoly with strictly convex costs. When price is a continuous variable, there is a generic non-existence of pure-strategy equilibrium. In the case of integer pricing, this is not so. We characterize a set of possible single price equilibria around the competitive price, which if non-empty will constitute the set of single price equilibria if the industry is large enough. Furthermore, we provide an example in which the highest equilibrium price can be arbitrarily far from the competitive price. Copyright 1993 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Suggested Citation

  • Dixon, Huw David, 1993. "Integer Pricing and Bertrand-Edgeworth Oligopoly with Strictly Convex Costs: Is It Worth More Than a Penny?," Bulletin of Economic Research, Wiley Blackwell, vol. 45(3), pages 257-268, July.
  • Handle: RePEc:bla:buecrs:v:45:y:1993:i:3:p:257-68
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    Cited by:

    1. repec:ebl:ecbull:v:12:y:2008:i:29:p:1-8 is not listed on IDEAS
    2. Roy Chowdhury, Prabal, 2008. "Bertrand-Edgeworth equilibrium with a large number of firms," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 746-761, May.
    3. Massimo A. De Francesco, 2008. "Existence of pure strategy equilibrium in Bertrand-Edgeworth games with imperfect divisibility of money," Economics Bulletin, AccessEcon, vol. 12(29), pages 1-8.
    4. Massimo A. Francesco, 2014. "A Dynamic Entry And Price Game With Capacity Indivisibility," Bulletin of Economic Research, Wiley Blackwell, vol. 66(4), pages 406-419, October.
    5. De Francesco, Massimo A., 2008. "Existence of pure strategy equilibria in Bertrand-Edgeworth games with imperfect divisibility of money," MPRA Paper 10826, University Library of Munich, Germany.
    6. Jacobs, Martin & Requate, Till, 2016. "Bertrand-Edgeworth markets with increasing marginal costs and voluntary trading: Experimental evidence," Economics Working Papers 2016-01, Christian-Albrechts-University of Kiel, Department of Economics.

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