Asked by
Jinsey Dowling
on Oct 25, 2024Verified
Which one of the following statements is a common criticism of the original Bertrand duopoly model?
A) Firms never choose optimal prices as strategic variables.
B) Firms would more naturally choose quantities if goods are homogenous.
C) The assumption that market share is split evenly between the firms is unrealistic.
D) A and B are correct.
E) B and C are correct.
Bertrand Duopoly
An economic model where two companies compete solely on price, leading to a situation where prices tend toward the cost of production.
Optimal Prices
The price point at which a business can sell its goods or services to maximize its profit margin without losing demand.
Homogenous Goods
Products that are essentially identical, where each unit is the same as every other unit in terms of attributes and quality.
- Familiarize yourself with the range of oligopoly structures and how they estimate impacts on prices and outputs.
Verified Answer
MO
Learning Objectives
- Familiarize yourself with the range of oligopoly structures and how they estimate impacts on prices and outputs.