Essay Database

Need an original paper?
Like us on Facebook in December and win FREE subscription to THOUSANDS high-quality essays and term papers
Like us on Facebook in December and win FREE subscription to THOUSANDS high-quality essays and term papers

For a duopoly involving homogeneous products, explain and contrast a Cournot, Stackelberg and Bertrand equilibrium.

Date Submitted: 09/09/2006 22:56:48
Category: / Social Sciences / Economics
Length: 8 pages (2138 words)
The critical problem faced by a firm in an oligopoly is that its decisions affect the prices and quantities of its rivals. The oligopoly problem arises because, where there are only a few suppliers to the market; the demand for the product of one firm depends significantly on the price and output. A non-cooperative duopoly is an industry consisting of two firms in which firms take their decisions independently and can be classified according to …
Is this Essay helpful? Join now to read this particular paper
and access over 480,000 just like this GET BETTER GRADES
…' However firm 1 anticipating firm 2's response would be obliged to set a zero price. Thus the equilibrium would involve zero prices. As the firm knows that it will be undercut when it sets a +ve price and therefore sets price=0. With differentiated products, the equilibrium of price leadership is consistent with +ve profits. Since there is a 2nd mover advantage, why would one firm elect to set price before the other firm does so.
Need a custom written paper? Let our professional writers save your time.