Free Entry Bertrand Competition

Prabal Roy Chowdhury ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines Bertrand competition under free entry, when firm size vis-a-vis market size is exogenously given. A free entry Bertrand Nash equilibrium (FEBE) exists if and only if relative market size is sufficiently large. Further, there is a unique coalition-proof Nash equilibrium price that corresponds to the minimum FEBE price, leads to average cost pricing for all active firms and is decreasing in market size.

Keywords: Bertrand competition; free entry; coalition-proof; contestability. (search for similar items in EconPapers)
JEL-codes: D5 L3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ent and nep-reg
Date: 2009-10
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:17837

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