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Cournot vs. Bertrand under centralised bargaining

Basak, Debasmita

Authors

Debasmita Basak



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.

Journal Article Type Article
Publication Date May 31, 2017
Journal Economics Letters
Print ISSN 0165-1765
Electronic ISSN 0165-1765
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 154
APA6 Citation Basak, D. (2017). Cournot vs. Bertrand under centralised bargaining. Economics Letters, 154, doi:10.1016/j.econlet.2017.02.031
DOI https://doi.org/10.1016/j.econlet.2017.02.031
Keywords Bargaining; Bertrand; Cournot; Centralised bargaining; Vertical pricing; Welfare
Publisher URL https://doi.org/10.1016/j.econlet.2017.02.031
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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