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Bertrand Competition with Asymmetric Costs: A Solution in Pure Strategies

Author

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  • Demuynck, Thomas
  • Herings, P. Jean-Jacques

    (Microeconomics & Public Economics, RS: GSBE ETBC, RS: GSBE Theme Conflict & Cooperation, RS: GSBE Theme Data-Driven Decision-Making)

  • Saulle, Riccardo D.

    (Microeconomics & Public Economics, RS: GSBE ETBC)

  • Seel, Christian

    (Microeconomics & Public Economics, RS: GSBE ETBC, RS: GSBE Theme Conflict & Cooperation)

Abstract

We consider two versions of a Bertrand duopoly with asymmetric costs and homogeneous goods. They differ in whether predatory pricing is allowed. For each version, we derive the Myopic Stable Set in pure strategies as introduced by Demuynck, Herings, Saulle, and Seel (2017). We contrast our prediction to the prediction of Nash Equilibrium in mixed strategies.

Suggested Citation

  • Demuynck, Thomas & Herings, P. Jean-Jacques & Saulle, Riccardo D. & Seel, Christian, 2018. "Bertrand Competition with Asymmetric Costs: A Solution in Pure Strategies," Research Memorandum 002, Maastricht University, Graduate School of Business and Economics (GSBE).
    • Handle: RePEc:unm:umagsb:2018002
    DOI: 10.26481/umagsb.2018002
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    References listed on IDEAS

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    1. Thomas Demuynck & P. Jean‐Jacques Herings & Riccardo D. Saulle & Christian Seel, 2019. "The Myopic Stable Set for Social Environments," Econometrica, Econometric Society, vol. 87(1), pages 111-138, January.
    2. Blume, Andreas, 2003. "Bertrand without fudge," Economics Letters, Elsevier, vol. 78(2), pages 167-168, February.
    3. Kartik, Navin, 2011. "A note on undominated Bertrand equilibria," Economics Letters, Elsevier, vol. 111(2), pages 125-126, May.
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    Cited by:

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    2. Soeren C. Schwuchow, 2023. "Organized crime as a link between inequality and corruption," European Journal of Law and Economics, Springer, vol. 55(3), pages 469-509, June.

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    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • 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

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