The Closed-Form Solution to Bertrand Competition with Exogenous Entry Costs or Participation
3 Pages Posted: 11 Oct 2017
Date Written: October 11, 2017
With entry costs, there are closed-form solutions for the canonical symmetric common-value Bertrand game. Equilibrium product prices are no longer zero. With zero entry costs, the Bertrand solution obtains; with unit entry cost, the monopoly solution obtains. A more general solution can be found in Lang and Rosenthal (1991).
JEL Classification: L1
Suggested Citation: Suggested Citation