Arbeitspapier
Relative profit maximization and Bertrand equilibrium with convex cost functions
The authors study pure strategy Bertrand equilibria in a duopoly in which two firms produce a homogeneous good with convex cost functions, and they seek to maximize the weighted sum of their absolute and relative profits. They show that there exists a range of the equilibrium price in duopolistic equilibria. This range of the equilibrium price is narrower and lower than the range of the equilibrium price in duopolistic equilibria under pure absolute profit maximization, and the larger the weight on the relative profit, the narrower and lower the range of the equilibrium price. 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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Series: Economics Discussion Papers ; No. 2014-7
- 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
- Handle
- Letzte Aktualisierung
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20.09.2024, 08:24 MESZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Satoh, Atsuhiro
- Tanaka, Yasuhito
- Kiel Institute for the World Economy (IfW)
Entstanden
- 2014