Journal
BULLETIN OF ECONOMIC RESEARCH
Volume 65, Issue 4, Pages 332-342Publisher
WILEY-BLACKWELL
DOI: 10.1111/j.1467-8586.2011.00411.x
Keywords
Bertrand model; Cournot model; mixed output-price competition; Stackelberg model
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Cournot establishes a Nash equilibrium to a duopoly game under output competition; Bertrand finds a different Nash equilibrium under price competition. Both treat the strategic choice variable (output versus price) and the timing of play as exogenous. We investigate Cournot-Bertrand models where one firm competes in output and the other competes in price in both static and dynamic settings. We also develop a general model where both the timing of play and the strategic choice variables are endogenous. Consistent with the conduct of Honda and Scion, we show that Cournot-Bertrand behaviour can be a Nash equilibrium outcome.
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