Relative profit maximization in asymmetric oligopoly

Atsuhiro Satoh () and Yasuhito Tanaka

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze Bertrand and Cournot equilibria in an asymmetric oligopoly in which the firms produce differentiated substitutable goods and seek to maximize their relative profits instead of their absolute profits. Assuming linear demand functions and constant marginal costs we show the following results. If the marginal cost of a firm is lower (higher) than the average marginal cost over the industry, its output at the Bertrand equilibrium is larger (smaller) than that at the Cournot equilibrium, and the price of its good at the Bertrand equilibrium is lower (higher) than that at the Cournot equilibrium.

Keywords: relative profit maximization; asymmetric oligopoly; Cournot and Bertrand equilibria (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2014-07-27
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Published in Economics Bulletin 3.34(2014): pp. 1653-1664

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Journal Article: Relative profit maximization in asymmetric oligopoly (2014)
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