Correlated equilibria in homogenous good Bertrand competition

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  • Ole Jann
  • Christoph Schottmüller
We show that there is a unique correlated equilibrium, identical to the unique Nash equilibrium, in the classic Bertrand oligopoly model with homogenous goods and identical marginal costs. This provides a theoretical underpinning for the so-called "Bertrand paradox'' as well as its most general formulation to date. Our proof generalizes to asymmetric marginal costs and arbitrarily many players in the following way: The market price cannot be higher than the second lowest marginal cost in any correlated equilibrium.
TidsskriftJournal of Mathematical Economics
Sider (fra-til)31-37
StatusUdgivet - mar. 2015

ID: 130802339