Rashid, M;
(2015)
Generalising Bertrand competition: a special case of the Hotelling model.
Economic Theory Bulletin
10.1007/s40505-015-0077-5.
(In press).
Preview |
Text
art%3A10.1007%2Fs40505-015-0077-5.pdf Download (468kB) | Preview |
Abstract
In the classic Bertrand duopoly, a firm need only undercut its competitor by an arbitrarily small amount in order to sell to all the consumers. This paper generalises the Bertrand model so that a firm must be more than \(\varepsilon \) cheaper than its competitor in order to take the market. I characterise the unique symmetric mixed-strategy equilibrium. Firms earn strictly positive expected profits in equilibrium which are increasing in \(\varepsilon \). The model is also a special case of the price-setting stage of the Hotelling model with a non-uniform distribution of consumers. The model can also be formulated as one of sequential search without replacement from a discrete distribution of prices.
| Type: | Article |
|---|---|
| Title: | Generalising Bertrand competition: a special case of the Hotelling model |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1007/s40505-015-0077-5 |
| Publisher version: | http://dx.doi.org/10.1007/s40505-015-0077-5 |
| Language: | English |
| Additional information: | This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/1472704 |
Archive Staff Only
 |
View Item |
