Competitive equilibrium as the outcome of a capacity-price game

• Autores: Maximo A. De Francesco
• Localización: Abstracts of the Fifth Spanish Meeting on Game Theory and Applications / coord. por Jesús Mario Bilbao Arrese , Francisco Ramón Fernández García , 2002, ISBN 84-472-0733-1, pág. 108
• Idioma: inglés
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• Resumen

  • The paper analyses Bertrand competition under free entry for a single market of a homogeneous commodity. It is shown that,similarly as in the Cournot setting (see Novshek, 1980, Novshek and Sonnenschein, 1978), in a �large� market the equilibrium of the capacity-price game exhibits long-run competitive features. Production is assumed to take place in the short run at constant variable unit cost c up to capacity; in the long run, average cost at full capacity is assumed to be constant at c + k, k being the cost of a unit of capacity.