Abstract
This article presents the classic Bertrand model of oligopolistic price competition and shows how alternative assumptions on economic primitives – such as the structure of demand and cost functions, tie-breaking rules, and product differentiation – shape Nash equilibrium prices and profits. We also discuss the related Bertrand–Edgeworth model of price competition in which consumers may be rationed – either strategically or due to capacity constraints – and illustrate how alternative rationing rules influence equilibrium.
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Baye, M.R., Kovenock, D. (2018). Bertrand Competition. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2462
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2462
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Publisher Name: Palgrave Macmillan, London
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Online ISBN: 978-1-349-95189-5
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