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Divisionalisation and Cournot Competition Yield Bertrand Outcomes
Author(s) -
Yuan Lasheng
Publication year - 2001
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.00110
Subject(s) - cournot competition , bertrand competition , precommitment , economics , bertrand paradox (economics) , oligopoly , competition (biology) , microeconomics , homogeneous , yield (engineering) , mathematical economics , product differentiation , mathematics , physics , ecology , combinatorics , biology , thermodynamics
Bertrand and Cournot model are the main frameworks in the analysis of oligopolistic competition. The outcomes from them are however different. Using a simultaneous‐move two‐stage game, this article shows that, in a homogeneous product market with fairly general demand, the Bertrand outcomes can be achieved by a combination of divisionalisation and ensuing Cournot competition. This finding can be viewed as an extension to or complements of Kreps and Scheinkman (1983), who show that Cournot outcomes can be achieved by quantity precommitment and Bertrand competition.