Bertrand-Edgeworth duopoly with linear costs: A tale of two paradoxes

Prabal Roy Chowdhury ()
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Prabal Roy Chowdhury: Indian Statistical Institute, New Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: Consider a Bertrand-Edgeworth duopoly with linear cost functions. If the firms produce to stock then no Nash equilibrium in pure strategies exists. If, however, the firms produce to order then all subgame perfect Nash equilibria involve the firms charging a price equal to marginal cost.

Keywords: Bertrand paradox; Edgeworth paradox; linear cost (search for similar items in EconPapers)
JEL-codes: D41 D43 L13 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2004-02
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