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Cournot, Bertrand or Chamberlin: Toward a reconciliation
Author(s) -
Parenti Mathieu,
Sidorov Alexander V.,
Thisse JacquesFrançois,
Zhelobodko Evgeny V.
Publication year - 2017
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12116
Subject(s) - cournot competition , monopolistic competition , bertrand paradox (economics) , bertrand competition , economics , oligopoly , microeconomics , perfect competition , outcome (game theory) , separable space , monopoly , mathematics , mathematical analysis
This paper compares the market equilibria in a differentiated industry under Cournot, Bertrand, and monopolistic competition. This is accomplished in a one‐sector economy where consumers are endowed with separable preferences. When firms are free to enter the market, monopolistically competitive firms charge lower prices than oligopolistic firms, while the mass of varieties provided by the market is smaller under the former than the latter. If the economy is sufficiently large, Cournot, Bertrand and Chamberlin solutions converge toward the same market outcome, which may be a competitive or a monopolistically competitive equilibrium, depending on the nature of preferences.