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

Listed author(s):
  • Atsuhiro SATOH

    ()

    (Faculty of Economics, Doshisha University, Japan.)

  • Yasuhito TANAKA

    ()

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

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.

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File URL: http://www.kspjournals.org/index.php/JEPE/article/view/986
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Article provided by KSP Journals in its journal Journal of Economics and Political Economy.

Volume (Year): 3 (2016)
Issue (Month): 3 (September)
Pages: 513-523

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Handle: RePEc:ksp:journ1:v:3:y:2016:i:3:p:513-523
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  1. Atsuhiro Satoh & Yasuhito Tanaka, 2013. "Relative profit maximization and Bertrand equilibrium with quadratic cost functions," Economics and Business Letters, Oviedo University Press, vol. 2(3), pages 134-139.
  2. Robert Gibbons & Kevin J. Murphy, 1990. "Relative Performance Evaluation for Chief Executive Officers," ILR Review, Cornell University, ILR School, vol. 43(3), pages 30, April.
  3. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
  4. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
  5. Fernando Vega-Redondo, 1997. "The Evolution of Walrasian Behavior," Econometrica, Econometric Society, vol. 65(2), pages 375-384, March.
  6. repec:sae:ilrrev:v:43:y:1990:i:3:p:30-51 is not listed on IDEAS
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