Bertrand competition and Cournot outcomes: further results
(2000) Economics Letters — Vol. 68, n° 3, p. 279-285 (2000)
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- The model of Kreps and Scheinkman where firms choose capacities and then compete in price is extended to oligopoly. Further, capacity is an imperfect commitment device: firms can produce beyond capacities at an additional unit cost θ. When θ is larger than the Cournot price, the Cournot outcome obtains in the unique subgame perfect equilibrium. When θ decreases from the Cournot price towards zero, the whole range of prices, from Cournot to Bertrand, is obtained in equilibrium.
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Boccard, N., & Wauthy, X. (2000). Bertrand competition and Cournot outcomes: further results. Economics Letters, 68(3), 279-285. https://doi.org/10.1016/S0165-1765(00)00256-1 (Original work published 2000)