The Comparison of Entry Deterrence Between Cournot And Bertrand Competition

Jinyoung Lee and Gyu Ho Wang
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Jinyoung Lee: Sogang University
Gyu Ho Wang: Sogang University

Korean Economic Review, 2007, vol. 23, 33-48

Abstract: We compare the incentive of an incumbent monopolist to deter the entry between Cournot and Bertrand competition in differentiated product markets. It is first shown that unless the products are perfect substitutes, the incumbent can block the entry more easily under Cournot competition than under Bertrand competition. For the entry deterrence, as long as the products are differentiated to some degree, like the blockaded entry, the incumbent would like to deter the entry more under Cournot competition than under Bertrand competition. However, if the product differentiation is quite small, the incumbent can deter the entry more easily under Bertrand competition than in the Cournot competition.

Keywords: Cournot competition; Bertrand competition; Blockaded entry; Deterred entry; Accommodated entry (search for similar items in EconPapers)
JEL-codes: C72 D43 L13 (search for similar items in EconPapers)
Date: 2007
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