Author: | Amir, R. Jin, J. Y. |
Title: | Cournot and Bertrand equilibria compared: substitutability, complementarity and concavity |
Journal: | International Journal of Industrial Organization
2001 : MAR, VOL. 19:3-4, p. 303-317 |
Index terms: | PRODUCTS OLIGOPOLY COMPETITION |
Language: | eng |
Abstract: | This paper assesses the view that Bertrand equilibrium is intrinsically more competitive than Cournot equilibrium. The authors consider an oligopoly model with linear demand, and a mixture of substitute and complementary products. The authors' results provide support for the conventional wisdom, and also indicate its limitations. The authors provide counter-examples showing that no clear-cut comparison of prices and quantities is possible without strategic complementarity in either of the two games. However, price competition is indeed more competitive according to the following criteria: lower mark-up/output ratios, larger average output, and lower average price. |
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