Bertrand-Edgeworth duopoly with linear costs: A tale of two paradoxes

Prabal Roy Chowdhury ()

Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers from Indian Statistical Institute, New Delhi, India

Abstract: Consider a Bertrand-Edgeworth duopoly with linear cost functions. If the firms produce to stock then no Nash equilibrium in pure strategies exists. If, however, the firms produce to order then all subgame perfect Nash equilibria involve the firms charging a price equal to marginal cost.

Keywords: Bertrand paradox; Edgeworth paradox; linear cost (search for similar items in EconPapers)
JEL-codes: D43 D41 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
Date: 2004-02
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Journal Article: Bertrand-Edgeworth duopoly with linear costs: A tale of two paradoxes (2005)
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