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Market transparency and Bertrand competition

Listed author(s):
  • 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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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. Vives, X., 1988. "Nash Equilibrium With Strategic Complementarities," UFAE and IAE Working Papers 107-88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  3. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x.
  4. Nilsson, Arvid, 1999. "Transparency and Competition," SSE/EFI Working Paper Series in Economics and Finance 298, Stockholm School of Economics, revised 29 Nov 1999.
  5. AMIR, Rabah & GRILO, Isabel, "undated". "On strategic complementarity conditions in Bertrand oligopoly," CORE Discussion Papers RP 1652, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. AMIR, Rabah, "undated". "Supermodularity and complementarity in economics: an elementary survey," CORE Discussion Papers RP 1823, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
  8. H. Peter Møllgaard & Per Baltzer Overgaard, 2001. "Market Transparency and Competition Policy," CIE Discussion Papers 2001-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  9. Boone, J. & Potters, J.J.M., 2002. "Transparency, Prices and Welfare with Imperfect Substitutes," Discussion Paper 2002-7, Tilburg University, Center for Economic Research.
  10. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
  11. AMIR, Rabah, 1994. "Cournot Oligopoly and the Theory of Supermodular Games," CORE Discussion Papers 1994013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
  13. Bester, Helmut & Petrakis, Emmanuel, 1995. "Price competition and advertising in oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1075-1088, June.
  14. Christian Schultz, 2002. "Market Transparency and Product Differentiation," CIE Discussion Papers 2002-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  15. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
  16. Michael Smith & Erik Brynjolfsson, 1999. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Computing in Economics and Finance 1999 1022, Society for Computational Economics.
  17. Schultz, Christian, 2005. "Transparency on the consumer side and tacit collusion," European Economic Review, Elsevier, vol. 49(2), pages 279-297, February.
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