On the Efficiency of Bertrand and Cournot Competition with Incomplete Information

A Lofaro

Economics Working Papers from European University Institute

Abstract: It is a well established idea that Bertrand competition is more efficient in welfare terms than Cournot competition regardless of the degree of substituability or complementary of the commodities produced by the firms. In this paper I show that, introducing incomplete information abour rivals' costs of production this conclusion does not always hold : in a homogeneous duopoly, the Bertrand price is higher than the Cournot one if both firms have low costs of production and the costs are uniformly distributed.

Keywords: OLIGOPOLIES; PRODUCTION; PRODUCTION COSTS; ECONOMIC MODELS (search for similar items in EconPapers)
JEL-codes: D43 E23 (search for similar items in EconPapers)
Date: 1996
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Persistent link: http://EconPapers.repec.org/RePEc:eui:euiwps:eco96/33

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