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Market transparency and Bertrand competition

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  • KNAUFF, Malgorzata

We investigate the effects of market transparency on prices in the Bertrand duopoly model for both the cases of strategic complementarities and strategic substitutes. For the former class of games “conventional wisdom” concerning prices is confirmed, since they decrease. The consumers are always better off with higher transparency but changes in firm's profits are ambiguous. For the latter class of games, an increase in market transparency may lead to an increase in one of the prices, which implies ambiguity in consumers' utility and firms' profits.

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File URL: http://alfresco.uclouvain.be/alfresco/download/attach/workspace/SpacesStore/b4ff1584-c7f6-4480-99f3-8b4ccdc7ded4/coredp_2006_37.pdf
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006037.

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Date of creation: 00 Apr 2006
Handle: RePEc:cor:louvco:2006037
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  1. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
  2. Rabah Amir & Isabel Grilo, 2003. "On strategic complementarity conditions in Bertrand oligopoly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(1), pages 227-232, 08.
  3. Bester, Helmut & Petrakis, Emmanuel, 1995. "Price competition and advertising in oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1075-1088, June.
  4. H. Peter Møllgaard & Per Baltzer Overgaard, 2001. "Market Transparency and Competition Policy," Rivista di Politica Economica, SIPI Spa, vol. 91(4), pages 11-64, April-May.
  5. Nilsson, Arvid, 1999. "Transparency and Competition," SSE/EFI Working Paper Series in Economics and Finance 298, Stockholm School of Economics, revised 29 Nov 1999.
  6. Schultz, Christian, 2005. "Transparency on the consumer side and tacit collusion," European Economic Review, Elsevier, vol. 49(2), pages 279-297, February.
  7. Schultz, Christian, 2004. "Market transparency and product differentiation," Economics Letters, Elsevier, vol. 83(2), pages 173-178, May.
  8. Rabah Amir, 2005. "Supermodularity and Complementarity in Economics: An Elementary Survey," Southern Economic Journal, Southern Economic Association, vol. 71(3), pages 636-660, January.
  9. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
  10. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
  11. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August.
  12. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
  13. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, July.
  14. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
  15. Boone, J. & Potters, J.J.M., 2002. "Transparency, Prices and Welfare with Imperfect Substitutes," Discussion Paper 2002-7, Tilburg University, Center for Economic Research.
  16. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321.
  17. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
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