Cournot vs. Bertrand under centralised bargaining

Basak, Debasmita

Abstract

We revisit the debate on Cournot and Bertrand profit comparison in a vertically related upstream market for inputs. We find that when an input pricing contract is determined through centralised bargaining, the final goods producers earn higher (lower) profit under quantity competition than under price competition if the goods are substitutes (complements). Our results are strikingly different to the ones obtained from a similar comparison in other vertical pricing models.

Citation

Basak, D. (2017). Cournot vs. Bertrand under centralised bargaining. Economics Letters, 154, https://doi.org/10.1016/j.econlet.2017.02.031

• Journal Article Type: Article
• Acceptance Date: Feb 24, 2017
• Online Publication Date: Mar 2, 2017
• Publication Date: May 31, 2017
• Deposit Date: Jul 4, 2017
• Publicly Available Date: Sep 3, 2018
• Journal: Economics Letters
• Print ISSN: 0165-1765
• Electronic ISSN: 1873-7374
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 154
• DOI: https://doi.org/10.1016/j.econlet.2017.02.031
• Keywords: Bargaining; Bertrand; Cournot; Centralised bargaining; Vertical pricing; Welfare
• Public URL: https://nottingham-repository.worktribe.com/output/863624
• Publisher URL: https://doi.org/10.1016/j.econlet.2017.02.031
• Contract Date: Jul 4, 2017