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Limit properties of Bertrand equilibria with exogenous entry

Author

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  • Prabal Roy Chowdhury

    (Indian Statistical Institute, New Delhi)

Abstract

For a large class of demand and cost functions, we characterize the limit equilibrium set under Bertrand oligopoly when entry is exogenous. Unless average cost is constant, we find that the folk theorem of perfect competition necessarily fails. We also relate our results to those in Novshek and Roy Chowdhury (2003).

Suggested Citation

  • Prabal Roy Chowdhury, 2004. "Limit properties of Bertrand equilibria with exogenous entry," Discussion Papers 04-14, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:04-14
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    References listed on IDEAS

    as
    1. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    2. R. J. Ruffin, 1971. "Cournot Oligopoly and Competitive Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(4), pages 493-502.
    3. Dastidar, Krishnendu Ghosh, 1995. "On the Existence of Pure Strategy Bertrand Equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 19-32, January.
    4. Dixon, Huw, 1990. "Bertrand-Edgeworth Equilibria when Firms Avoid Turning Customers Away," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 131-146, December.
    5. William Novshek, 1980. "Cournot Equilibrium with Free Entry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 473-486.
    6. Novshek, William & Chowdhury, Prabal Roy, 2003. "Bertrand equilibria with entry: limit results," International Journal of Industrial Organization, Elsevier, vol. 21(6), pages 795-808, June.
    7. Koji Okuguchi, 1973. "Quasi-Competitiveness and Cournot Oligopoly," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(1), pages 145-148.
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    More about this item

    Keywords

    Bertrand oligopoly; limit properties; exogenous entry; folk theorem;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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