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Correlated equilibria in homogenous good Bertrand competition

Author

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  • Ole Jann

    (Department of Economics, Copenhagen University)

  • Christoph Schottmüller

    (Department of Economics, Copenhagen University)

Abstract

We show that there is a unique correlated equilibrium, identical to the unique Nash equilibrium, in the classic Bertrand oligopoly model with homogenous goods. This provides a theoretical underpinning for the so-called "Bertrand paradox" and also generalizes earlier results on mixed-strategy Nash equilibria. Our proof generalizes to asymmetric marginal costs and arbitrarily many players.

Suggested Citation

  • Ole Jann & Christoph Schottmüller, 2014. "Correlated equilibria in homogenous good Bertrand competition," Discussion Papers 14-17, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:1417
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    References listed on IDEAS

    as
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    Cited by:

    1. R. A. Edwards & R. R. Routledge, 2023. "Existence and uniqueness of Nash equilibrium in discontinuous Bertrand games: a complete characterization," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(2), pages 569-586, June.
    2. 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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    More about this item

    Keywords

    Bertrand paradox; correlated equilibrium; price competition;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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