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Bertrand competition with cost uncertainty

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  • Routledge, Robert R.

Abstract

We analyze the classical model of Bertrand competition in a homogeneous good market with constant marginal costs and uncertainty regarding rivals' costs. First, we show that there exists a mixed strategy Nash equilibrium under the conventional equal sharing rule. Second, we illustrate the result for the case of piecewise-affine market demand.

Suggested Citation

  • Routledge, Robert R., 2010. "Bertrand competition with cost uncertainty," Economics Letters, Elsevier, vol. 107(3), pages 356-359, June.
  • Handle: RePEc:eee:ecolet:v:107:y:2010:i:3:p:356-359
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    References listed on IDEAS

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    Cited by:

    1. Aditi Sengupta, 2013. "Incentive to Reduce Cost under Incomplete Information," Auburn Economics Working Paper Series auwp2013-10, Department of Economics, Auburn University.
    2. Fedor Iskhakov & John Rust & Bertel Schjerning, 2018. "The Dynamics Of Bertrand Price Competition With Cost‐Reducing Investments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(4), pages 1681-1731, November.
    3. Marie-Laure Cabon-Dhersin & Nicolas Drouhin, 2020. "A general model of price competition with soft capacity constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 95-120, July.
    4. Marie-Laure Cabon-Dhersin & Nicolas Drouhin, 2010. "The end of the Bertrand Paradox ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00542486, HAL.
    5. Marie-Laure Cabon-Dhersin & Nicolas Drouhin, 0. "A general model of price competition with soft capacity constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 0, pages 1-26.
    6. Wentao Yi & Chunqiao Tan, 2019. "Bertrand Game with Nash Bargaining Fairness Concern," Complexity, Hindawi, vol. 2019, pages 1-22, August.
    7. Makoto Yano & Takashi Komatsubara, 2018. "Price competition or price leadership," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(4), pages 1023-1057, December.

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