IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v39y1990i2p131-46.html
   My bibliography  Save this article

Bertrand-Edgeworth Equilibria when Firms Avoid Turning Customers Away

Author

Listed:
  • Dixon, Huw

Abstract

This paper provides a simple solution to the problem of nonexistence of pure-strategy equilibria in Bertrand-Edgeworth models with strictly convex costs. The voluntary-trading constraint in standard Bertrand-Edgeworth models is generalized to allow for there being costs incurred when customers are turned away. So long as the industry is sufficiently large, the presence of such costs ensures that the competitive price will be an equilibrium. There will be other single price equilibria, but if the offense costs are small, all equilibria will be close to the competitive outcome. Copyright 1990 by Blackwell Publishing Ltd.

Suggested Citation

  • Dixon, Huw, 1990. "Bertrand-Edgeworth Equilibria when Firms Avoid Turning Customers Away," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 131-146, December.
  • Handle: RePEc:bla:jindec:v:39:y:1990:i:2:p:131-46
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0022-1821%28199012%2939%3A2%3C131%3ABEWFAT%3E2.0.CO%3B2-Y&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Novshek, William & Chowdhury, Prabal Roy, 2003. "Bertrand equilibria with entry: limit results," International Journal of Industrial Organization, Elsevier, vol. 21(6), pages 795-808, June.
    2. Chowdhury, Prabal Roy, 1999. "Bertrand-Edgeworth equilibria with unobservable output, uncoordinated consumers and large number of firms," Economics Letters, Elsevier, vol. 63(2), pages 207-211, May.
    3. 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.
    4. García Díaz, Antón & Kujal, Praveen, 1998. "List princing and pure strategy outcomes in a bertrand edgeworth duopoly," UC3M Working papers. Economics 6089, Universidad Carlos III de Madrid. Departamento de Economía.
    5. Krishnendu Dastidar, 2001. "Collusive outcomes in price competition," Journal of Economics, Springer, vol. 73(1), pages 81-93, February.
    6. Prabal Roy Chowdhury, 2004. "Limit properties of Bertrand equilibria with exogenous entry," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-14, Indian Statistical Institute, New Delhi, India.
    7. Makoto Yano & Takashi Komatsubara, 2012. "Price Competition or Tacit Collusion," KIER Working Papers 807, Kyoto University, Institute of Economic Research.
    8. Andersson, O. & Argenton, C. & Weibull, J., 2010. "Robustness to Strategic Uncertainty (Revision of DP 2010-70)," Discussion Paper 2010-98, Tilburg University, Center for Economic Research.
    9. Chia-Hung Sun & Fu-Chuan Lai, 2013. "Hotelling was right with decreasing returns to scale and a coalition-proof refinement," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 953-971, June.
    10. Andersson, Ola & Argenton, Cédric & Weibull, Jörgen W., 2014. "Robustness to strategic uncertainty," Games and Economic Behavior, Elsevier, vol. 85(C), pages 272-288.
    11. 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.
    12. Wambach, Achim, 1999. "Bertrand competition under cost uncertainty," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 941-951, October.
    13. Alberto Iozzi, 2004. "Spatial duopoly under uniform delivered pricing when firms avoid turning customers away," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(3), pages 513-529, September.
    14. Andersson, Ola & Argenton, Cédric & Weibull, Jörgen, 2010. "Robustness to strategic uncertainty in price competition," SSE/EFI Working Paper Series in Economics and Finance 0726, Stockholm School of Economics, revised 08 Apr 2010.
    15. repec:hal:journl:halshs-00542486 is not listed on IDEAS
    16. 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.
    17. Dastidar, Krishnendu Ghosh, 1997. "Comparing Cournot and Bertrand in a Homogeneous Product Market," Journal of Economic Theory, Elsevier, vol. 75(1), pages 205-212, July.
    18. Waddle, Roberts, 2005. "Strategic profit sharing between firms: the bertrand model," UC3M Working papers. Economics we050902, Universidad Carlos III de Madrid. Departamento de Economía.
    19. Argenton, Cédric & Müller, Wieland, 2012. "Collusion in experimental Bertrand duopolies with convex costs: The role of cost asymmetry," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 508-517.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:39:y:1990:i:2:p:131-46. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.