Pricing, Product Diversity and Search Costs: A Bertrand-Chamberlin-Diamond Model

Simon Anderson and Régis Renault

Working Papers from Toulouse - GREMAQ

Abstract: Bertrand argued that price would be driven down to marginal cost even with only two firms in the market. Chamberlin, by introducing product differentiation, argued that price will exceed marginal cost even when there are many firms. Thus product differentiation resolves the "Bertrand Paradox". Diamond argued that firms would set monopoly prices in the Bertrand context if consumers face search costs.

Keywords: OLIGOPOLIES; PRICING; CONSUMERS; ECONOMIC EQUILIBRIUM (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 (search for similar items in EconPapers)
Pages: 25 pages
Date: 1997
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Citations: View citations in EconPapers (20)

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Related works:
Journal Article: Pricing, Product Diversity, and Search Costs: A Bertrand-Chamberlin-Diamond Model (1999)
Working Paper: Pricing, product diversity, and search costs: a Bertrand-Chamberlin-Diamond model (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:gremaq:97.481

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