Relative profit maximization and equivalence of Cournot and Bertrand equilibria in asymmetric duopoly

Atsuhiro Satoh () and Yasuhito Tanaka

Economics Bulletin, 2014, vol. 34, issue 2, 819-827

Abstract: We study the relation between a Cournot equilibrium and a Bertrand equilibrium in an emph{asymmetric} duopoly with differentiated goods in which each firm maximizes its relative profit that is the difference between its profit and the profit of the rival firm. Both demand and cost functions are linear but asymmetric, that is, demand functions for the goods are asymmetric and the firms have different marginal cots. We will show that a Cournot equilibrium and a Bertrand equilibrium coincide even in an asymmetric duopoly.

Keywords: asymmetric duopoly; relative profit maximization; equivalence of Cournot and Bertrand equilibria (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2014-04-23
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Citations: View citations in EconPapers (37)

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