Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46903 
Authors: 
Year of Publication: 
1995
Citation: 
[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1995
Series/Report no.: 
Kiel Working Paper No. 703
Publisher: 
Kiel Institute of World Economics (IfW), Kiel
Abstract: 
This paper demonstrates that the Bertrand paradox does not hold if cost functions are strictly convex. Instead, multiple equilibria exist which can be Pareto-ranked. The paper shows that the Pareto-dominant equilibrium may imply profus higher than in Cournot competition or may even sustain perfect cartelization. The potential scope for implicit collusion is discussed for the case that the Pareto-dominant noncooperative equilibrium does not support perfect cartelization. Due to multiple non-cooperative equilibria, the discussion involves finitely repeated Bertrand games as well. The paper discusses several strategies which may support implicit collusion. 1t develops the notion of punishment-proofness, and it demonstrates that strongly renegotiationproof equilibria exist for sujficiently high discount factors. Finally, extensions are discussed which cover Stackeiberg leadership, fixed and sunk costs and endogenous market structures.
Subjects: 
Bertrand competition
Bertrand paradox
implicit collusion
renegotiationproofness
punishment-proofness
JEL: 
C72
D43
L13
Document Type: 
Working Paper
Document Version: 
Digitized Version

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.