Heterogeneous Behavioral Rules in the Oligopolistic Case

Markus Pasche

Working Paper Series B from Friedrich Schiller University of Jena, School of of Economics and Business Administration

Abstract: In a static symmetric duopoly the set of behavioral rules is extended to different types of markup pricing. Using an equilibrium concept suggested in Pasche (2001), it is shown that dependend on the markup neither pure Cournot nor pure Bertrand behavior is a behavioral equilibrium profile. Instead, there is a rationale for the usage of simple heuristics. The presence of markup rules leads to Stackelberg outcomes. Furthermore, pure markup behavior is more competitive than in Cournot case but less competitive than in Bertrand case. It is shown, that multiple behavioral equilibria and heterogeneous behavior may arise, where at least one player uses price setting strategies.

Keywords: oligopoly; markup rules; heterogeneity; behavioral equilibrium. (search for similar items in EconPapers)
JEL-codes: D21 D43 L13 (search for similar items in EconPapers)
Date: 2002-02-10
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jen:jenavo:2002-01

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