Cournot–Bertrand endogenous behavior in a differentiated oligopoly with entry deterrence

Duarte Brito, Margarida Catalão-Lopes

Research output: Contribution to journalArticlepeer-review

Abstract

This paper presents a new theoretical justification for the Cournot–Bertrand model to arise in equilibrium when firms have, at the outset, the same cost structure and sell symmetrically differentiated products. The Cournot–Bertrand model assumes some firms compete on price, adjusting their production to meet demand, while others set quantities and let their price adjust until market equilibrium is reached. We show that this may occur endogenously due to the possibility of entry, which may be deterred when some of the incumbents decide to set prices, while others free ride on this behavior and choose quantities.

Original languageEnglish
JournalTheory And Decision
DOIs
Publication statusAccepted/In press - 3 Oct 2022

Keywords

  • Cournot–Bertrand oligopoly
  • Entry deterrence
  • Product differentiation

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