Bertrand Versus Cournot Competition in a Vertical Structure: A Note

15 Pages Posted: 25 Aug 2012  

Arijit Mukherjee

University of York

Udo Broll

Dresden University of Technology - Faculty of Economics and Business Management

Soma Mukherjee

University of Nottingham

Date Written: September 2012

Abstract

In a vertical structure with a profit‐maximizing upstream firm, we show that whether the profits in the downstream market are higher under Bertrand competition or under Cournot competition depends on the technology differences among the downstream firms and on the pricing strategy (namely uniform pricing or price discrimination) of the upstream firm. The upstream firm's profit, the profit of the upstream and the downstream firms taken together, and social welfare are always higher under Bertrand competition than under Cournot competition.

Suggested Citation

Mukherjee, Arijit and Broll, Udo and Mukherjee, Soma, Bertrand Versus Cournot Competition in a Vertical Structure: A Note (September 2012). The Manchester School, Vol. 80, Issue 5, pp. 545-559, 2012. Available at SSRN: https://ssrn.com/abstract=2135966 or http://dx.doi.org/10.1111/j.1467-9957.2012.02228.x

Arijit Mukherjee (Contact Author)

University of York ( email )

Heslington
York, YO10 5DD
United Kingdom

Udo Broll

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

Soma Mukherjee

University of Nottingham

University Park
Nottingham, NG8 1BB
United Kingdom

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