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http://hdl.handle.net/10419/46903
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| Title: | | Profits in pure Bertrand oligopolies  |
| Authors: | | Stähler, Frank |
| Issue Date: | | 1995 |
| Series/Report no.: | | Kiel Working Papers 703 |
| 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 |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Kieler Arbeitspapiere, IfW
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