Bertrand competition in vertically related markets

Tomomichi Mizuno and Kazuhiro Takauchi

Applied Economics Letters, 2024, vol. 31, issue 6, 524-529

Abstract: We build a successive Bertrand model with a homogenous good. We show that increasing the production efficiency of an industry can reduce firms’ profits. We also show that this result holds in the successive Cournot model. Hence, an industrial policy aimed at improving production efficiency may be undesirable for firms.

Date: 2024
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DOI: 10.1080/13504851.2022.2140101

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