Bertrand–Edgeworth Duopoly with Buyouts or First Refusal Contracts

In this game the players are firms involved in a Bertrand–Edgeworth duopoly market. Payoffs to the low priced firm depend only on the own price, whereas the payoff to the high priced firm depends on both its own price and the price of the opponent. The price of the opponent enters the payoff function of the high priced firm through buyout or a first refusal contract. Only when the total capacity in the market is less than the output in a monopoly situation, there is an equilibrium in pure strategies.Journal of Economic LiteratureClassification Numbers: C72, D43, L12.