15 Pages Posted: 25 Aug 2012
Date Written: September 2012
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: 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
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