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Existence of pure strategy equilibrium in Bertrand-Edgeworth games with imperfect divisibility of money

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  • Massimo A. De Francesco

    (Department of Economics, University of Siena)

Abstract

This paper incorporates imperfect divisibility of money in a price game where a given number of identical firms produce a homogeneous product at constant unit cost up to capacity. We find necessary and sufficient conditions for the existence of a pure strategy equilibrium. Unlike in the continuous action space case, with discrete pricing there may be a range of symmetric pure strategy equilibria - which we fully characterize - a range which may or may not include the competitive price. Also, we determine the maximum number of such equilibria when competitive pricing is itself an equilibrium.

Suggested Citation

  • Massimo A. De Francesco, 2008. "Existence of pure strategy equilibrium in Bertrand-Edgeworth games with imperfect divisibility of money," Economics Bulletin, AccessEcon, vol. 12(29), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-08l10034
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    References listed on IDEAS

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    More about this item

    Keywords

    Bertrand-Edgeworth competition;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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