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Comparing Cournot and Bertrand equilibria revisited

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  • Jin, Jim Y.

Abstract

This paper compares Cournot and Bertrand equilibria with mixed products, linear demand and cost functions. It is found that a firm's price (output) need not be higher (lower) in Cournot equilibrium. However, given any number of firms and a mixture of complement and substitute products, every firm's price margin/output ratio is always higher in Cournot equilibrium, and the weighted squared outputs (price margins) are higher (lower) in Bertrand equilibrium. When price (quantity) competition is a supermodular game, consumer surplus (social welfare) is higher in price competition. Nevertheless, price competition results in more market concentration measured by Herfindahl index.

Suggested Citation

  • Jin, Jim Y., 1997. "Comparing Cournot and Bertrand equilibria revisited," Discussion Papers, Research Unit: Market Dynamics FS IV 97-4, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbmdy:fsiv974
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    Cited by:

    1. Philippe Choné & Laurent Linnemer, 2019. "The quasilinear quadratic utility model: an overview," CESifo Working Paper Series 7640, CESifo.
    2. Choné, Philippe & Linnemer, Laurent, 2020. "Linear demand systems for differentiated goods: Overview and user’s guide," International Journal of Industrial Organization, Elsevier, vol. 73(C).

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