Bertrand versus Cournot with Convex Variable Costs

Delbono, Flavio ; Lambertini, Luca (2015) Bertrand versus Cournot with Convex Variable Costs. Bologna: Dipartimento di Scienze economiche DSE, p. 17. DOI 10.6092/unibo/amsacta/4168. In: Quaderni - Working Paper DSE (994). ISSN 2282-6483.
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Abstract

Within a simple model of homogeneous oligopoly, we show that the traditional ranking between Bertrand and Cournot equilibria may be reversed. For price setting entails a continuum of price equilibria under convex variable costs, departure from marginal cost pricing may be observed. As a consequence, Bertrand-Nash equilibrium profits (welfare) may be higher (lower) than Cournot-Nash ones. The reversal of the standard rankings occurs when pricing strategies mimic collusive behaviour.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Delbono, Flavio
Lambertini, Luca
Keywords
oligopoly, pricing strategy, multiple equilibria
Subjects
ISSN
2282-6483
DOI
Deposit date
27 Feb 2015 08:08
Last modified
28 Oct 2015 13:25
URI

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