Market Equilibria Compared: The Linear Case

Paolo Bertoletti

No 582, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: Alternative market allocations are compared in a linear setting with product differentiation. With two commodities, assuming that both Ramsey and Cournot quantities are positive, the Cournotian quantities are shown to be not larger than their Bertrand counterparts, regardless of product substitutability. It also turns out that the case of a Bertrand price exceeding its Cournotian counterpart (which requires product complementarity) and the existence of a "subordinate" commodity receiving a negative price-cost margin à la Ramsey are equivalent conditions.

Keywords: Bertrand vs Cournot; Ramsey pricing; subordinate commodity; product differentiation (search for similar items in EconPapers)
JEL-codes: D11 D43 L13 (search for similar items in EconPapers)
Pages: 7
Date: 2026-10
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