, Volume 5, Issue 1, pp 19-32

On the existence of pure strategy Bertrand equilibrium

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access

Summary

The paper analyses the existence of pure strategy Nash equilibrium in price competition (or Bertrand equilibrium) in a homogeneous product market when costs are strictly convex and proves that if output is demand determined such equilibrium always exists. This paper also characterises such equilibria and shows that if firms are identical such equilibria are necessarily non-unique. However for firms with asymmetric costs it can be unique or non-unique.

I am greatly indebted to Anjan Mukherji and Kunal Sengupta for this paper. I also express my profound gratitude to a referee of this journal for a very helpful set of suggestions.