BERTRAND COMPETITION CAN YIELD HIGHER PRICES THAN MONOPOLY

Helge Sanner

Bulletin of Economic Research, 2007, vol. 59, issue 3, 247-254

Abstract: If we take into account the spatial dimension of markets, prices of incumbent firms may be higher and consumer surplus may be lower with competition than with monopoly. This result obtains unambiguously, even in the supposedly highly competitive case of Bertrand competition. Moreover, we are able to show that consumers of the commodity may be worse off with duopoly, if the distance between the firms' sites is sufficiently large.

Date: 2007
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