Limit-pricing as Bertrand equilibrium

Prabal Roy Chowdhury ()

Economic Theory, 2002, vol. 19, issue 4, 822 pages

Abstract: We consider a Bertrand duopoly model with increasing returns to scale where one of the firms have a cost advantage and prices vary over a grid. We find that typically more than one equilibria exist. However, there are only two perfect equilibria. Moreover, as the size of the grid becomes small, both these equilibria converge to the limit-pricing outcome.

Keywords: Limit-pricing; Bertrand equilibrium; Increasing returns to scale; Perfect equilibrium. (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2002-02-06
Note: Received: February 25, 2000; revised version: January 9, 2001
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Citations: View citations in EconPapers (15)

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