Bertrand Competition with Asymmetric Costs: A Solution in Pure Strategies

Maastricht University School of Business and Economics, Working Paper RM/18/002

10 Pages Posted: 12 Mar 2018

See all articles by Thomas Demuynck

Thomas Demuynck

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

P. Jean-Jacques Herings

Maastricht University

Riccardo Saulle

Maastricht University

Christian Seel

Maastricht University

Date Written: February 1, 2018

Abstract

We consider two versions of a Bertrand duopoly with asymmetric costs and homogeneous goods. They differ in whether predatory pricing is allowed. For each version, we derive the Myopic Stable Set in pure strategies as introduced by Demuynck, Herings, Saulle, and Seel (2017). We contrast our prediction to the prediction of Nash Equilibrium in mixed strategies.

Keywords: Bertrand Competition, Asymmetric Costs, Myopic Stable Set

JEL Classification: C70, C72, D43

Suggested Citation

Demuynck, Thomas and Herings, P. Jean-Jacques and Saulle, Riccardo and Seel, Christian, Bertrand Competition with Asymmetric Costs: A Solution in Pure Strategies (February 1, 2018). Maastricht University School of Business and Economics, Working Paper RM/18/002. Available at SSRN: https://ssrn.com/abstract=3136375 or http://dx.doi.org/10.2139/ssrn.3136375

Thomas Demuynck

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

P. Jean-Jacques Herings (Contact Author)

Maastricht University ( email )

Department of Economics
P.O. Box 616
6200 MD Maastricht
Netherlands
+31 43 3883636 (Phone)
+31 43 3884878 (Fax)

HOME PAGE: http://www.personeel.unimaas.nl/p.herings/herings.htm

Riccardo Saulle

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Christian Seel

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands
0031 433883651 (Phone)

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