Limit-pricing as Bertrand equilibrium |
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Authors: | Prabal Roy Chowdhury |
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Affiliation: | (1) CSDILE, School of International Studies (SIS), Jawaharlal Nehru University (JNU), New Delhi – 110067, INDIA, , IN |
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Abstract: | Summary. We consider a Bertrand duopoly model with increasing returns to scale where one of the firms have a cost advantage and prices vary over a grid. We find that typically more than one equilibria exist. However, there are only two perfect equilibria. Moreover, as the size of the grid becomes small, both these equilibria converge to the limit-pricing outcome. Received: February 25, 2000; revised version: January 9, 2001 |
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Keywords: | and Phrases: Limit-pricing Bertrand equilibrium Increasing returns to scale Perfect equilibrium. |
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