Competition is often associated with the idea that there are many traders in the market or that each price maker is small as compared to the market. This paper introduces this notion of market size in a model of price competition with imperfect substitutes by constructing a model which creates a bridge between the Chamberlin and Bertrand-Edge worth lines of work on price competition. We investigate the role of two fundamental parameters in the existence of an equilibrium: the market size, given by the number n of competitors, and the degree of substitutability. We prove that: (a) For a given number of n ≦ 2 of competitors, a sufficiently large but finite degree of substitutability entails nonexistence. This thus generalizes the Bertrand-Edgeworth nonexistence result, which applies only to perfect substitutes, (b) Conversely for a given upper bound on the degree of substitutability, a sufficiently large number of competitors ensures existence, which thus introduces a significant role for market size in models of imperfect competition. We finally investigate the proximity of an equilibrium (when it exists) to a “competitive outcome”, and we find that both high substitutability and large market size are a condition for competitiveness.

Journal Article The Disequilibrium Approach to Monopolistic Price Setting and General Monopolistic Equilibrium Get access Jean-Pascal Benassy Jean-Pascal Benassy CEPREMAP Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 43, Issue 1, February 1976, Pages 69–81, https://doi.org/10.2307/2296601 Published: 01 February 1976 Article history Received: 01 July 1974 Accepted: 01 March 1975 Published: 01 February 1976

K-equilibrium concept 3/ The existence of a K-equilibrium V -EFFICIENCY PROPERTIES OF K-EQUILIBRIUM 1/ The criterion 2/ Properties of a K-equilibrium 3/ Inefficiency and multiplier effects 4/ The cause of inefficiency VI -AM EXA/vlPLE 1/ The economy 2/ Computation of equilibrium transactions

[This paper studies conditions for competitiveness of strategic market games where agents set prices and quantities (a game is said to be competitive if its Nash equilibria are Walrasian). Some necessary conditions are first derived which show that discontinuities in the strategic outcome functions may be an essential element for competitiveness. Then a set of economically meaningful sufficient conditions for competitiveness are derived. These bridge the gap between visions of competition "à la Bertrand" and some recent non-Walrasian concepts.]