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Quality Uncertainty as Resolution of the Bertrand Paradox


  • Attila Tasnadi
  • Trenton Smith
  • Andrew Hanks

    () (School of Economic Sciences, Washington State University)


We show that in a homogeneous-good duopoly market with quality uncertainty and constant unit costs, the Bertrand paradox (i.e., marginal cost pricing) can be avoided.

Suggested Citation

  • Attila Tasnadi & Trenton Smith & Andrew Hanks, 2010. "Quality Uncertainty as Resolution of the Bertrand Paradox," Working Papers 2010-1, School of Economic Sciences, Washington State University.
  • Handle: RePEc:wsu:wpaper:tgsmith-5

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    References listed on IDEAS

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    Cited by:

    1. Andrew Hanks & Trenton Smith & Attila Tasnadi, 2010. "Opportunity Knocks: An Economic Analysis of Television Advertisements," Working Papers 2010-18, School of Economic Sciences, Washington State University.

    More about this item


    oligopoly; endogenous preferences; threshold utility;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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