Cournot, Bertrand or Chamberlin: Toward a reconciliation

Mathieu Parenti, Alexander V. Sidorov, Jacques François Thisse, Evgeny V. Zhelobodko

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)29-45
Number of pages17
JournalInternational Journal of Economic Theory
Volume13
Issue number1
DOIs
Publication statusPublished - 1 Mar 2017

Keywords

  • Bertrand competition
  • Cournot competition
  • free entry
  • monopolistic competition

OECD FOS+WOS

  • 5.02.GY ECONOMICS
  • 5.02.DI BUSINESS

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