The Bertrand Paradox, the Useless Auctioneer and the Launhardt Model

14 Pages Posted: 30 Mar 2015

See all articles by Luca Lambertini

Luca Lambertini

University of Bologna - Department of Economics

Manuela Mosca

Università del Salento (Lecce) - Dipartimento di Scienze dell'Economia

Date Written: December 2014

Abstract

We revisit the Cournot–Bertrand debate in the light of Cournot, Edgeworth and Launhardt, tracing back to Launhardt the origin of price competition in duopoly models with constant returns to scale. Then, we discuss the formalisation of consumer utility function for differentiated products, first appearing in Launhardt and then in Bowley. This allows us to point out that assuming that firms know the demand function(s) is equivalent to assuming that they know the structure of consumer preferences. Therefore, we argue that there is no role for the auctioneer, either in Cournot or in Walras.

JEL Classification: B10, B20, B23, B31, B41, C70, L13

Suggested Citation

Lambertini, Luca and Mosca, Manuela, The Bertrand Paradox, the Useless Auctioneer and the Launhardt Model (December 2014). Australian Economic Papers, Vol. 53, Issue 3-4, pp. 170-183, 2014. Available at SSRN: https://ssrn.com/abstract=2586297 or http://dx.doi.org/10.1111/1467-8454.12028

Luca Lambertini (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092600 (Phone)
+39 051 2092664 (Fax)

Manuela Mosca

Università del Salento (Lecce) - Dipartimento di Scienze dell'Economia ( email )

Lecce 73100
Italy

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