IDEAS home Printed from
   My bibliography  Save this article

On Price-Making Contracts And Economic Theory: Rethinking Bertrand And Edgeworth


  • Robert R. Routledge



A problematic issue in economic theory is the study of price determination. Two distinct approaches to this difficult topic have been taken: (i) in Bertrand competition it is assumed sellers enter the market with a commitment to supply all demand forthcoming from buyers (ii) in Edgeworth competition sellers quote prices with no commitment to supply more than their competitive supply. Both these types of market contract struggle to provide credible pricemaking foundations for perfect competition. In this paper we outline an alternative approach to contract formation with combines Bertrand’s [1883] insight regarding price competition with Edgeworth’s [1881] notion of recontracting. The result is that we can provide a price-making analogue of the Debreu-Scarf [1963] showing that in large markets price-making contracts are ‘close’ to the competitive equilibrium.

Suggested Citation

  • Robert R. Routledge, 2012. "On Price-Making Contracts And Economic Theory: Rethinking Bertrand And Edgeworth," Cahiers d’économie politique / Papers in Political Economy, L'Harmattan, issue 63, pages 171-188.
  • Handle: RePEc:cpo:journl:y:2012:i:63:p:171-188

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    equilibrium; existence; core convergence; price-taking behaviour; market contracts.;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection


    Access and download statistics


    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:cpo:journl:y:2012:i:63:p:171-188. 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: (Carlos Andrés Vasco Correa). General contact details of provider: .

    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.