Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85466 
Year of Publication: 
1998
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 98-083/1
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
Consider a Bertrand model in which each firm may be inactive with aknown probability, so the number of active firms is uncertain. Thissimple model has a mixed-strategy equilibrium in which industryprofits are positive and decline with the number of firms, the samefeatures which make the Cournot model attractive. Unlike in a Cournotmodel with similar incomplete information, Bertrand profits alwaysncrease in the probability other firms are inactive. Profits declinemore sharply than in the Cournot model, and the pattern is similar tothat found by Bresnahan & Reiss (1991).
Document Type: 
Working Paper

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