Correlated equilibria in homogenous good Bertrand competition
Research output: Contribution to journal › Journal article › Research › peer-review
We show that there is a unique correlated equilibrium, identical to the unique Nash equilibrium, in the classic Bertrand oligopoly model with homogenous goods and identical marginal costs. This provides a theoretical underpinning for the so-called "Bertrand paradox'' as well as its most general formulation to date. Our proof generalizes to asymmetric marginal costs and arbitrarily many players in the following way: The market price cannot be higher than the second lowest marginal cost in any correlated equilibrium.
Original language | English |
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Journal | Journal of Mathematical Economics |
Volume | 57 |
Pages (from-to) | 31-37 |
ISSN | 0304-4068 |
DOIs | |
Publication status | Published - Mar 2015 |
- Faculty of Social Sciences - Bertrand paradox, correlated equilibrium, price competition
Research areas
ID: 130802339