8.1. Bertrand in the real world. The Bertrand model of price competition suggests that, under a given set of conditions, firms make zero economic profits even if there are only two firms. However, there are many instances of industries with a small number of competitors where firms appear to earn more than zero economic profits. Give an example of an industry dominated by a couple of firms where profits are significant. Explain why the predictions of the Bertrand model are not borne out. (Cabral, 20170224) Cabral, L. B. (20170224). Introduction to Industrial Organization, 2nd Edition [VitalSource Bookshelf version]. Retrieved from vbk://9780262338943 Always check citation for accuracy before use.
8.1. Bertrand in the real world. The Bertrand model of price competition suggests that, under a given set of conditions, firms make zero economic profits even if there are only two firms. However, there are many instances of industries with a small number of competitors where firms appear to earn more than zero economic profits. Give an example of an industry dominated by a couple of firms where profits are significant. Explain why the predictions of the Bertrand model are not borne out. (Cabral, 20170224) Cabral, L. B. (20170224). Introduction to Industrial Organization, 2nd Edition [VitalSource Bookshelf version]. Retrieved from vbk://9780262338943 Always check citation for accuracy before use.
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