Economía

Bertrand and Price-Taking Equilibria in Markets with Product Differentiation

Número
369
Autor
Germán Coloma
Mes/Año
02/2008
Adjunto
Resumen

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.