Imitation and Crowd: A Different Approach to the Bertrand Paradox

8 Pages Posted: 28 Nov 2003

See all articles by Marco Di Cintio

Marco Di Cintio

University of Salento - Department of Economics and Mathematics and Statistics

Date Written: February 24, 2003

Abstract

This paper provides the Nash equilibrium under homogeneous duopoly a la Bertrand. The optimal consumers' behaviour is obtained assuming a specific externality in the utility function. This externality permits to consider at the same time, and not alternatively, the imitation and the crowd effect, which are opposite force at work. The result gives prices over marginal cost and the strong sensibility of preferences to the crowd effect.

Keywords: Bertrand, homogeneous duopoly, externalities, imitation, crowd, vanity, conformity

JEL Classification: D11, D62, L11, Ll3

Suggested Citation

Di Cintio, Marco, Imitation and Crowd: A Different Approach to the Bertrand Paradox (February 24, 2003). Available at SSRN: https://ssrn.com/abstract=448300 or http://dx.doi.org/10.2139/ssrn.448300

Marco Di Cintio (Contact Author)

University of Salento - Department of Economics and Mathematics and Statistics ( email )

Piazza Tancredi, n7
Lecce, 73100
Italy

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