Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56158
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dc.contributor.authorWeibull, Jörgen W.en_US
dc.date.accessioned2012-03-28T13:04:54Z-
dc.date.available2012-03-28T13:04:54Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/56158-
dc.description.abstractIn the original model of pure price competition, due to Joseph Bertrand (1883), firms have linear cost functions. For any number of identical such price-setting firms, this results in the perfectly competitive outcome; the equilibrium price equal the firms' (constant) marginal cost. This paper provides a generalization of Bertrand's model from linear to convex cost functions. I analyze pure price competition both in a static setting - where the firms interact once and for all - and in dynamic setting - where they interact repeatedly over an indefinite future. Sufficient conditions are given for the existence of Nash equilibrium in the static setting and for subgame perfect equilibrium in the dynamic setting. These equilibrium sets are characterized, and it is shown that there typically exists a whole interval of Nash equilibrium prices in the static setting and subgame perfect equilibria in the dynamic setting. It is shown that firms may earn sizable profits and that their equilibrium profits may increase if their production costs go up.en_US
dc.language.isoengen_US
dc.publisher|aEkonomiska Forskningsinst. |cStockholmen_US
dc.relation.ispartofseries|aSSE/EFI Working Paper Series in Economics and Finance |x622en_US
dc.subject.jelD43en_US
dc.subject.ddc330en_US
dc.subject.keywordBertrand competitionen_US
dc.subject.stwPreiswettbewerben_US
dc.subject.stwDuopolen_US
dc.subject.stwTheorieen_US
dc.titlePrice competition and convex costsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn507825748en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US

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