Correlated Equilibria in Homogenous Good Bertrand Competition

17 Pages Posted: 18 Jul 2014

See all articles by Ole Jann

Ole Jann

University of Oxford - Nuffield Department of Medicine; University of Oxford - Department of Economics

Christoph Schottmüller

University of Cologne; Tilburg Law and Economics Center (TILEC)

Multiple version iconThere are 2 versions of this paper

Date Written: July 14, 2014

Abstract

We show that there is a unique correlated equilibrium, identical to the unique Nash equilibrium, in the classic Bertrand oligopoly model with homogenous goods. This provides a theoretical underpinning for the so-called "Bertrand paradox" and also generalizes earlier results on mixed-strategy Nash equilibria. Our proof generalizes to asymmetric marginal costs and arbitrarily many players.

Keywords: Bertrand paradox, correlated equilibrium, price competition

JEL Classification: C72, D43, L13

Suggested Citation

Jann, Ole and Schottmüller, Christoph and Schottmüller, Christoph, Correlated Equilibria in Homogenous Good Bertrand Competition (July 14, 2014). TILEC Discussion Paper No. 2014-027, Available at SSRN: https://ssrn.com/abstract=2467065 or http://dx.doi.org/10.2139/ssrn.2467065

Ole Jann (Contact Author)

University of Oxford - Nuffield Department of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, Oxfordshire OX1 3UQ
United Kingdom

Christoph Schottmüller

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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