Artikel
Relative profit maximization and Bertrand equilibrium with convex cost functions
This study derives pure strategy Bertrand equilibria in a duopoly in which two firms produce a homogeneous good with convex cost functions and seek to maximize the weighted sum of their absolute and relative profits. The study shows that there exists a range of equilibrium prices in duopolistic equilibria. This range of equilibrium prices is narrower and lower than the range of equilibrium prices in duopolistic equilibria under pure absolute profit maximization. Moreover, the larger the weight on the relative profit, the narrower and lower the range of equilibrium prices. In this sense, relative profit maximization is more aggressive than absolute profit maximization.
- Sprache
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Englisch
- Erschienen in
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Journal: Economics: The Open-Access, Open-Assessment E-Journal ; ISSN: 1864-6042 ; Volume: 8 ; Year: 2014 ; Issue: 2014-34 ; Pages: 1-15 ; Kiel: Kiel Institute for the World Economy (IfW)
- Klassifikation
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Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Oligopoly and Other Imperfect Markets
- Thema
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Bertrand equilibrium
convex cost function
relative profit maximization
- Ereignis
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Geistige Schöpfung
- (wer)
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Satoh, Atsuhiro
Tanaka, Yasuhito
- Ereignis
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Veröffentlichung
- (wer)
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Kiel Institute for the World Economy (IfW)
- (wo)
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Kiel
- (wann)
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2014
- DOI
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doi:10.5018/economics-ejournal.ja.2014-34
- Handle
- Letzte Aktualisierung
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20.09.2024, 08:21 MESZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Satoh, Atsuhiro
- Tanaka, Yasuhito
- Kiel Institute for the World Economy (IfW)
Entstanden
- 2014