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Bertrand-Edgeworth equilibrium with a large number of firms

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  • Prabal Roy Chowdhury

    () (Indian Statistical Institute, New Delhi)

Abstract

We examine a model of price competition where the firms simultaneously decide on both price and quantity, and are free to supply less than the quantity demanded. We demonstrate that if the tie-breaking rule is `non-manipulable', then, for a large class of rationing rules, there is a unique equilibrium in pure strategies whenever the number of firms is large enough. We then show that the `folk theorem' of perfect competition holds. Finally, we examine if the results go through when the firms are asymmetric, or produce to order.

Suggested Citation

  • Prabal Roy Chowdhury, 2004. "Bertrand-Edgeworth equilibrium with a large number of firms," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-12, Indian Statistical Institute, New Delhi, India.
  • Handle: RePEc:ind:isipdp:04-12
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    Cited by:

    1. Hirata, Daisuke, 2008. "Bertrand-Edgeworth Equilibrium in Oligopoly," MPRA Paper 7946, University Library of Munich, Germany.
    2. Jacobs, Martin & Requate, Till, 2016. "Bertrand-Edgeworth markets with increasing marginal costs and voluntary trading: Experimental evidence," Economics Working Papers 2016-01, Christian-Albrechts-University of Kiel, Department of Economics.
    3. De Francesco, Massimo A., 2008. "Existence of pure strategy equilibria in Bertrand-Edgeworth games with imperfect divisibility of money," MPRA Paper 10826, University Library of Munich, Germany.
    4. Massimo A. De Francesco, 2008. "Existence of pure strategy equilibrium in Bertrand-Edgeworth games with imperfect divisibility of money," Economics Bulletin, AccessEcon, vol. 12(29), pages 1-8.
    5. repec:ebl:ecbull:v:12:y:2008:i:29:p:1-8 is not listed on IDEAS

    More about this item

    Keywords

    Bertrand equilibrium; pure strategy; non-manipulable tiebreaking rule;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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