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Bertrand equilibria and sharing rules

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  • Steffen Hoernig

Abstract

We analyze how sharing rules affect Nash equilibria in Bertrand games, where the sharing of profits at ties is a decisive assumption. Necessary conditions for either positive or zero equilibrium profits are derived. Zero profit equilibria are shown to exist under weak conditions if the sharing rule is sign-preserving. For Bertrand markets we define the class of expectation sharing rules, where profits at ties are derived from some distribution of quantities. In this class the winner-take-all sharing rule is the only one that is always sign-preserving, while for each pair of demand and cost functions there may be many others.

Suggested Citation

  • Steffen Hoernig, 2005. "Bertrand equilibria and sharing rules," Nova SBE Working Paper Series wp468, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp468
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    1. Hoernig, Steffen H., 2002. "Mixed Bertrand equilibria under decreasing returns to scale: an embarrassment of riches," Economics Letters, Elsevier, vol. 74(3), pages 359-362, February.

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    More about this item

    Keywords

    Bertrand games; sharing rule; tie-breaking rule; sign-preserving sharing rules; expectation sharing rules;
    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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