The Bertrand duopoly Model

The Bertrand - , ,.IntheBertrand model,, tosellitsgoods 1 Ratherthanchoosing

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The Bertrand duopoly Model, developed in the late nineteenth century by French  economist Joseph Bertrand, changes the choice of strategic variables. In the Bertrand  model, rather than choosing how much to produce, each firm chooses the price at which  to sell its goods.  1. Rather than choosing quantities, the firms choose the price at which they  sell the good.  2. All firms make this choice simultaneously.  3. Firms have identical cost structures.  4. The model is restricted to a one-stage game. Firms choose their prices  only once.  Although the setup of the Bertrand Model differs from the Cournot model only in the  strategic variable, the two models yield surprisingly different results. Whereas the  Cournot model yields equilibriums that fall somewhere in between the monopolistic  outcome and the free market outcome, the Bertrand model simply reduces to the 
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This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.

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The Bertrand - , ,.IntheBertrand model,, tosellitsgoods 1 Ratherthanchoosing

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