Bertrand and Price-Taking Equilibria in Markets with Product Differentiation

University of CEMA Working Paper No. 369

10 Pages Posted: 5 Dec 2007

Date Written: February 2008

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 price-taking equilibrium of the homogeneous-product market, which is in turn one of the multiple Bertrand equilibria for that market.

Keywords: Bertrand equilibrium, price-taking equilibrium, product differentiation

JEL Classification: D43, L13

Suggested Citation

Coloma, German, Bertrand and Price-Taking Equilibria in Markets with Product Differentiation (February 2008). University of CEMA Working Paper No. 369, Available at SSRN: https://ssrn.com/abstract=1037821 or http://dx.doi.org/10.2139/ssrn.1037821

German Coloma (Contact Author)

CEMA University ( email )

Department of Economics
Av. Cordoba 374
Buenos Aires, Capital Federal C1054AAP
Argentina
+54 11 6314-3000 (Phone)
+54 11 4314-1654 (Fax)

HOME PAGE: http://https://ucema.edu.ar/german-coloma

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