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
Date Written: February 1, 2018
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: Suggested Citation