WHOLESALE PRICES AND COURNOT‐BERTRAND COMPETITION. (18th October 2016)

• Record Type: Journal Article
• Authors: Rozanova, Olga
• Is Part Of: Bulletin of economic research. Volume 69:Number 4(2017:Oct.)
• Page Start: E12
• Page End: E18
• Publication Date: 2016-10-18
• Subjects: wholesale prices -- vertical relations -- Cournot‐Bertrand model -- two‐part tariffs -- D43 -- L13 -- L14; Economics -- Periodicals; Great Britain -- Economic conditions -- Periodicals; 330.05
• DOI: 10.1111/boer.12098
• Languages: English
• ISSNs: 0307-3378

Abstract

ABSTRACT: This note considers the competing vertical structures framework with Cournot‐Bertrand competition downstream. It shows that the equilibrium wholesale price paid by a Cournot (Bertrand)‐type retailer is above (below) marginal costs of a corresponding manufacturer. This result contrasts with the one under pure competition downstream (i.e., Cournot or Bertrand), where the wholesale price is set below (above) marginal costs in case of a Cournot (Bertrand) game at the retail level.