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Equivalence of Cournot and Bertrand equilibria in duopoly under relative profit maximization: A general analysis

Author

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  • Atsuhiro SATOH

    (Faculty of Economics, Doshisha University, Japan.)

  • Yasuhito TANAKA

    (Faculty of Economics, Doshisha University, Kyoto, Japan.)

Abstract

We study the relationship between Cournot equilibrium and Bertrand equilibrium in duopoly with differentiated goods in which each firm maximizes its relative profit. We show that Cournot equilibrium and Bertrand equilibrium coincide under relative profit maximization even with general demand and cost functions. This result is due to the fact that a game of relative profit maximization in duopoly is a two-person zero-sum game.

Suggested Citation

  • Atsuhiro SATOH & Yasuhito TANAKA, 2016. "Equivalence of Cournot and Bertrand equilibria in duopoly under relative profit maximization: A general analysis," Journal of Economics and Political Economy, EconSciences Journals, vol. 3(3), pages 513-523, September.
    • Handle: RePEc:cvv:journ1:v:3:y:2016:i:3:p:513-523
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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