Imperfect Competition Models
- Primary authors:
In the Bertrand model firms simultaneously set **prices**. Firms experience no quantity constraints, and thus the firm with the lowest price supplies the entire market. If two firms tie on price they split the market. Under this framework the standard result is that outcomes are the same as in a competitive market[^2], that is price equals marginal cost and firms make zero profits.
[^2]: Albeit Under some strong assumptions viz. constant returns to scale and continuous prices.