Equivalence of Cournot and Bertrand equilibria in duopoly under relative profit maximization: A general analysis

Atsuhiro SATOH, Yasuhito TANAKA

Abstract


Abstract. We study the relationship between Cournot equilibrium and Bertrand equilibrium in duopoly with differentiated goods in which each firm maximizes its relative profit. We show that Cournot equilibrium and Bertrand equilibrium coincide under relative profit maximization even with general demand and cost functions. This result is due to the fact that a game of relative profit maximization in duopoly is a two-person zero-sum game.

Keywords. Relative profit maximization, Duopoly, Cournot equilibrium, Bertrand equilibrium.

JEL. D43, L13.


Keywords


relative profit maximization, duopoly, Cournot equilibrium, Bertrand equilibrium

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References


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DOI: http://dx.doi.org/10.1453/jepe.v3i3.986

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