Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 1998-08-18
Number: 98-083/1
Author-Name: Maarten C.W. Janssen
Author-Email: janssen@few.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Eric Rasmusen
Author-Email: Erasmuse@indiana.edu
Author-Workplace-Name: Indiana University
Title: Bertrand Competition under Uncertainty
Abstract: Consider a Bertrand model in which each firm may be inactive with aknown probability, so the number of active firms is uncertain. Thissimple model has a mixed-strategy equilibrium in which industryprofits are positive and decline with the number of firms, the samefeatures which make the Cournot model attractive. Unlike in a Cournotmodel with similar incomplete information, Bertrand profits alwaysncrease in the probability other firms are inactive. Profits declinemore sharply than in the Cournot model, and the pattern is similar tothat found by Bresnahan & Reiss (1991).
File-Url: https://papers.tinbergen.nl/98083.pdf
File-Format: application/pdf
File-Size: 280371 bytes
Handle: RePEc:tin:wpaper:19980083