Economic Theory

, Volume 19, Issue 2, pp 271–282

Winner-take-all price competition

  • Michael R. Baye
  • John Morgan
Research Articles

DOI: 10.1007/PL00004212

Cite this article as:
Baye, M. & Morgan, J. Econ Theory (2002) 19: 271. doi:10.1007/PL00004212

Summary.

We analyze an oligopoly model of homogeneous product price competition that allows for discontinuities in demand and/or costs. Conditions under which only zero profit equilibrium outcomes obtain in such settings are provided. We then illustrate through a series of examples that the conditions provided are “tight” in the sense that their relaxation leads to positive profit outcomes.

Keywords and Phrases: Price competition, Discontinuity, Bertrand, Hotelling. 
JEL Classification Numbers: D43, C72. 

Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Michael R. Baye
    • 1
  • John Morgan
    • 2
  1. 1.Department of Business Economics and Public Policy, Kelley School of Business,Indiana University, 1309 East Tenth Street, Bloomington, IN 47405-1701, USA% (e-mail: mbaye@indiana.edu) US
  2. 2.Woodrow Wilson School for Public and International Affairs and Department of Economics,Princeton University, Princeton, NJ 08544, USA (e-mail: rjmorgan@princeton.edu) US

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