Review of Economic Studies Vol. 53 No. 2 1986
Bertrand-Edgeworth Oligopoly in Large Markets
Abstract
The relation between perfectly competitive and monopolistically competitive equilibria is analysed for a Bertrand-Edgeworth model of a single market in which capacity constrained firms choose prices as strategies. The market always has a Nash equilibrium in pure or mixed strategies. As the number of firms increases, the corresponding equilibria converge in distribution to a perfectly competitive price. This result provides a justification for perfect competition that is based on an explicit account of price formation. However, monopoly prices persist with a positive but vanishing probability. Regularity or well defined inverse demand functions are not required.
- DOI
- 10.2307/2297646
- Volume
- 53
- Issue
- 2
- Pages
- 175
- Sources
- bibtex:phds-export.bib openalex crossref