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Bertrand Menu Competition

Author

Listed:
  • Fuhito Kojima
  • Bobak Pakzad-Hurson

Abstract

We study a variation of the price competition model a la Bertrand, in which firms must offer menus of contracts that obey monotonicity constraints, e.g., wages that rise with worker productivity to comport with equal pay legislation. While such constraints limit firms' ability to undercut their competitors, we show that Bertrand's classic result still holds: competition drives firm profits to zero and leads to efficient allocations without rationing. Our findings suggest that Bertrand's logic extends to a broader variety of markets, including labor and product markets that are subject to real-world constraints on pricing across workers and products.

Suggested Citation

  • Fuhito Kojima & Bobak Pakzad-Hurson, 2025. "Bertrand Menu Competition," Papers 2504.16842, arXiv.org, revised Jul 2025.
    • Handle: RePEc:arx:papers:2504.16842
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    References listed on IDEAS

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    3. Diego GentilePassaro & Fuhito Kojima & Bobak Pakzad-Hurson, 2023. "Equal Pay for Similar Work," Papers 2306.17111, arXiv.org, revised Sep 2025.
    4. Eduardo M. Azevedo & Daniel Gottlieb, 2017. "Perfect Competition in Markets With Adverse Selection," Econometrica, Econometric Society, vol. 85, pages 67-105, January.
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    6. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage bargaining with on-the-job search: theory and evidence," SciencePo Working papers hal-03471856, HAL.
    7. repec:spo:wpmain:info:hdl:2441/dc0ckec3fcb29ms9850c12h1p is not listed on IDEAS
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