Competitive and Bertrand Equilibria, with and without Product Differentiation

German Coloma

doi:10.4067/S0718-88702009000100003

Authors

German Coloma Universidad del CEMA

DOI:

https://doi.org/10.4067/S0718-88702009000100003

Keywords:

Bertrand Equilibrium, Competitive Equilibrium, Product Differentiation

Abstract

In this paper we show that a homogeneous-product market with multiple Bertrand equilibria becomes a market with a single Bertrand equilibrium when we introduce a small degree of product differentiation. When differentiation tends to zero, that Bertrand equilibrium converges to the unique competitive equilibrium of the homogeneous-product market, which is in turn one of the multiple Bertrand equilibria for that market.

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References

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