Equilibrium prices in the Bertrand and Cournot oligopolies |
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| Institution: | 1. Department of Finance, College of Business, Florida State University, 311 Rovetta Building, Tallahassee, FL 32306-1110, USA;2. Department of Business Administration, College of Business, Pusan National University, San 30, Jangjeon-dong, Keumjeong-gu, Busan 609-735, South Korea;1. School of Industrial Engineering and Management, Oklahoma State University, United States;2. Department of Economics and Legal Studies, Oklahoma State University, United States;1. Department of Economics, University of Vienna, Austria;2. Higher School of Economics, Moscow, Russia;1. Sapienza University of Rome (DIAG), Italy;2. Telenor Research, Norway |
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| Abstract: | The equilibrium prices for the Bertrand and Cournot oligopolies with product differentiation are compared. If all firms have linear demand and cost functions, and if, in addition, the Jacobian matrix of the demand functions has a dominant negative diagonal, the Cournot equilibrium prices are not lower than the Bertrand ones. The general condition for the comparison of the Bertrand and Cournot equilibrium prices can be derived even if the nonlinearity is involved in the cost and/or demand functions. |
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