All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

Yasuhito Tanaka
''Equivalance of Cournot and Bertrand equilibria in differentiated duopoly under relative profit maximization with linear demand''
( 2013, Vol. 33 No.2 )
We investigate the relation between a Cournot equilibrium and a Bertrand equilibrium in a duopoly with differentiated substitutable goods in which each firm maximizes its relative profit that is the difference between its profit and the profit of the rival firm. We show that when firms maximize relative profits, a Cournot equilibrium and a Bertrand equilibrium coincide, and the equilibrium outputs under relative profit maximization are larger than the equilibrium outputs at the Cournot equilibrium and those at the Bertrand equilibrium under absolute profit maximization. We assume that demand functions for the goods of the firms are linear, the marginal costs of the firms are common and constant and the fixed costs are zero.
Keywords: relative profit maximization, Cournot equilibrium, Bertrand equilibrium
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
D4 - Market Structure and Pricing: General
Manuscript Received : Apr 05 2013 Manuscript Accepted : Jun 14 2013

  This abstract has been downloaded 1482 times                The Full PDF of this paper has been downloaded 153559 times