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Oligopolistic price competition with a continuous demand

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  • Blavatskyy, Pavlo

Abstract

Demand functions in two related models of oligopolistic price competition with homogeneous products are derived from a set of economically plausible axioms. These axioms represent weaker assumptions about consumer behavior compared to the classic Bertrand model. In both models, firms do not necessarily face a discontinuous demand at an equilibrium price level. Hence, firms may charge an equilibrium price that is above their marginal cost (earning a strictly positive profit). The equilibrium price is lower when there are more firms and/or consumers are more sensitive to price changes. In the limit, when consumers are highly sensitive to price changes, both models converge to the classic Bertrand model.

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  • Blavatskyy, Pavlo, 2018. "Oligopolistic price competition with a continuous demand," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 123-131.
    • Handle: RePEc:eee:matsoc:v:93:y:2018:i:c:p:123-131
    DOI: 10.1016/j.mathsocsci.2018.03.002
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    Cited by:

    1. de Almeida Prado, Fernando Pigeard & Blavatskyy, Pavlo, 2021. "Existence and uniqueness of price equilibrium in oligopoly model with power demand," Mathematical Social Sciences, Elsevier, vol. 111(C), pages 1-10.

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