Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes

@article{kreps-scheinkman-90, abstract = {Bertrand's model of oligopoly, which gives perfectly competitive outcomes, assumes that: (1) there is competition over prices and (2) production follows the realization of demand. We show that both of these assumptions are required. More precisely, consider a two-stage oligopoly game where, first, there is simultaneous production, and, second, after production levels are made public, there is price competition. Under mild assumptions about demand, the unique equilibrium outcome is the Cournot outcome. This illustrates that solutions to oligopoly games depend on both the strategic variables employed and the context (game form) in which those variables are employed.}, author = {Kreps, David M. and Scheinkman, Jose A.}, citeulike-article-id = {206112}, journal = {The Bell Journal of Economics}, keywords = {450-1, empirical\_io, oligopoly, tartumicropapers}, number = {2}, pages = {326--337}, posted-at = {2005-05-20 19:54:03}, priority = {2}, title = {Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes}, url = {http://www.jstor.org/stable/3003636}, volume = {14}, year = {1983} }

TY - JOUR ID - kreps-scheinkman-90 L3 - citeulike-article-id:206112 N2 - Bertrand's model of oligopoly, which gives perfectly competitive outcomes, assumes that: (1) there is competition over prices and (2) production follows the realization of demand. We show that both of these assumptions are required. More precisely, consider a two-stage oligopoly game where, first, there is simultaneous production, and, second, after production levels are made public, there is price competition. Under mild assumptions about demand, the unique equilibrium outcome is the Cournot outcome. This illustrates that solutions to oligopoly games depend on both the strategic variables employed and the context (game form) in which those variables are employed. IS - 2 JF - The Bell Journal of Economics EP - 337 TI - Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes VL - 14 SP - 326 KW - 450-1 KW - empirical_io KW - oligopoly KW - tartumicropapers AU - Kreps, David AU - Scheinkman, Jose PY - 1983/// UR - http://www.jstor.org/stable/3003636 ER -