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• W1488774306 abstract "We analyze Bertrand's price competition in a homogenous good market with a fixed cost and an increasing marginal cost (i.e., with variable returns to scale). If the fixed cost is avoidable, we show that the non-subadditivity of the cost function at the output corresponding to the oligopoly break-even price, denoted by D(pL(n)), is su±cient to guarantee that the market supports an equilibrium in pure strategies with two or more active firms supplying at least D(pL(n)). Conversely, the existence of a pure strategy equilibrium ensures that the cost function is not subadditive at every output greater than or equal to D(pL(n)). As a by-product, the latter implies that the average cost cannot be decreasing over the range of outputs mentioned before. In addition, we also prove that the existence of a price-taking equilibrium is sufficient, but not necessary, for Bertrand's price competition to possess an equilibrium in pure strategies. This provides a simple existence result for the case where the fixed cost is fully unavoidable." @default.
• W1488774306 created "2016-06-24" @default.
• W1488774306 creator A5052237842 @default.
• W1488774306 creator A5058713998 @default.
• W1488774306 date "2008-09-01" @default.
• W1488774306 modified "2023-10-03" @default.
• W1488774306 title "Bertrand's price competition in markets with fixed costs" @default.
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• W1488774306 hasPublicationYear "2008" @default.
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