Correlated Equilibria in Homogenous Good Bertrand Competition
17 Pages Posted: 18 Jul 2014
There are 2 versions of this paper
Correlated Equilibria in Homogenous Good Bertrand Competition
Number of pages: 17
Posted: 21 Aug 2014
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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: 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
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